Bloomberg: Companies’ Big Use of ‘Tax Havens’ to Be Hit With New Obstacles

An article in Bloomberg argues that recent transparency requirements and international tax changes could now make the use of tax havens, to dodge taxes, by global corporations less attractive.

The article also highlights new numbers emerging of how major US companies like Merck & Co., AbbVie Inc., and Caterpillar Inc. are booking profits offshore to cut their taxes.

‘The numbers come from newly required disclosures, linked to the introduction of a ‘global minimum tax’ which provide information on the makeup of companies’ tax bills that have been closely held in the past. Advocacy groups and other observers have long suspected that many companies try to avoid taxes by parking profits in jurisdictions offering them lower tax rates or other tax breaks’

Further information will be available soon from EU and Australian disclosures which Bloomberg state ‘will arm investors with more information about companies’ strategies’.

Whilst it is acknowledged that the global minimum tax may curb some of the worst of the international income shifting that we’ve seen in the past, the impact will be limited by the introduction of an exemption for US corporations, with a different set of standards introduced in parallel.

As noted by Jason Ward, principal analyst at the Center for International Corporate Tax Accountability and Research. “If you’re exempted, why would you change the behavior that you were planning on before?”