The US companies are keeping their profits made overseas out of the homeland in order to avoid taxes. It's estimated that 500 large US companies are holding over $2.1 trillion accumulated profits overseas to avoid taxes. These companies have to shell out $620billion by paying US taxes to repatriate the funds.
The list of big names includes Apple, General Electric (GM), Microsoft, Pfizer, etc. Only 30 major companies hold $1.4tn accounting for 65 percent of the total $2.1tn. US firms prefer to pay six percent tax overseas than paying 35 percent of US corporate tax.
A study done by two left-leaning non-profit groups reveals those three-fourth companies in the Fortune-500 list of major US companies have subsidiaries in overseas tax havens Bermuda, Ireland, Luxembourg and the Netherlands.
Global's top brand Apple tops the list as it has kept $181.1bn. It needs to pay US taxes of up to $59.2bn in order to repatriate the profits to the homeland. General Electric (GE) with $119bn, Microsoft with $108.3bn and Pfizer with $74bn. GE has stashed profits in 18 tax havens, Microsoft in five tax havens and Pfizer in 151 subsidiaries in different countries.
Out of 358 companies that hold profits overseas, 72 firms are Fortune-500 and operating subsidiaries in tax havens as of the end of 2014, according to the study. All the 358 companies have 7,622 subsidiaries in different tax havens globally. Only 30 corporate majors hold $1.4tn profit overseas accounting for 65 percent of the total amount.
At a time when corporate earnings are witnessing flat growth, the overseas-held profitsrecord encouraging growth. The profits of the US companies held in safe havens rose eight percent from previous year. Only 58 firms recorded small amounts of the rise in their profits overseas. US companies don't feel any need to repatriate the money by paying huge taxes, observe market analysts.
57 companies informed the US government that they are expected to pay $184.4bn in form of US taxes if their profits were not parked offshore. However, these companies pay six percent tax overseas as against the 35 percent of US corporate tax.
The study also recommended that Congress should ensure that US companies bring back profits from offshore tax havens. This will decrease the deficit in the government budget. The improved profits of US companies are expected to boost the market confidence thus improving the US financial markets.
The Center of Tax Justice and the US Public Interest Research Group Education Fund extracted information from the financial filings to Securities and Exchange Commission (SEC).
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