Washington: At least 18 American companies are hoarding profits in countries where certain taxes are levied at a low rate or not at all, popularly known as tax havens, in a bid to avoid paying taxes, while earning billions of dollars in profits, according to a new report from a research group.
According to the Huffington Post, the Citizens for Tax Justice (CTJ) report claimed that if the companies involved had brought their combined profits to their home country, they would have ended paying 92 billion dollars in taxes.
The executive director of the Institute on Taxation and Economic Policy, CTJ’s research partner, Matthew Gardner said that it is wrong to claim that Apple has created this unique process of stashing profits offshore, adding that several big companies are likely to tread the same route.
Nike, Microsoft and Apple have so far been reported by CTJ to have indulged in the process of avoiding tax payments.
However, Gardner noted that it is likely that there are more companies than those on CTJ’s list that avoid taxes by keeping their profits in other countries.
The report said that Apple had come under the scanner last month following a Senate hearing revelation that the company had paid only two percent in taxes on 74 billion dollars in profits by accumulating its money in an Irish subsidiary that had not declared its tax residency anywhere in the world.
Apple CEO Tim Cook had said that the company pays ‘all the taxes they owe’ which encourages corporate tax avoidance that some lawmakers are targeting.
According to the report, if the companies on the CTJ’s list brought back their overseas profits to US, they will have to pay a tax rate above 30 percent, indicating that the countries where their money is currently hoarded have very low tax rates.
The CTJ report disclosed that there are 235 other companies that have told the Securities and Exchange Commission that they are holding profits overseas but did not reveal their hypothetical US tax rate. The report further found that the companies hold almost 1.3 trillion dollars in non-repatriated profits abroad.
First Published: Tuesday, June 04, 2013, 14:07