U.S. companies add offshore profits to avoid taxes
The largest U.S.-based companies added $206 billion to their offshore profit stockpiles last year in order to put earnings in low-tax countries, Bloomberg reported.
Multinational companies accumulated $1.95 trillion outside the U.S., which was up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg.
Governments around the world have cut tax rates to try to keep corporations from shifting profits to countries with lower tax rates, but Congress has not acted thus far. The response by U.S. companies has been to book profits offshore.
The increase in profits held outside the United States has been particularly large and steady at technology companies, many of which have moved patents and other intellectual property to low-tax countries.
Microsoft Corp., Apple Inc. and IBM Corp. last year added $37.5 billion, or 18.2 percent of the total increase.
“The loopholes in our tax code right now give such a big reward to companies that use gimmicks to make it look like they earn their profits offshore,” said Dan Smith, a tax and budget advocate at the U.S. Public Interest Research Group, in an interview with Bloomberg.
Credit: Business Record