Bloomberg: Companies’ big overseas tax bills spur profit-shifting concerns

Bloomberg reports on emerging data, resulting from new transparency requirements in the US which are raising questions about the profit maximization
strategies of some of the biggest companies in the world and whether they are using aggressive strategies to move big chunks of US profit to lower-tax
countries.

Indications that US companies are paying more abroad than at home aren’t surprising, said Jason Ward, principal analyst at the Center for International Corporate Tax Accountability and Research.

“The new FASB data provides welcome and specific details to what we already knew in a broad sense. Most large US multinationals are huge global tax dodgers and major abusers of tax havens,”

Bloomberg reports that more disclosures are likely in coming weeks, as companies file their annual reports. Companies didn’t have to release such details about their tax payments in the past, but it’s now required under US accounting rules that took effect recently.

“These new disclosures are a major improvement on what we’ve had before,” said Zorka Milin, policy director at the Financial Accountability and Corporate Transparency (FACT) Coalition. “The hope is that with more public scrutiny, big multinationals are less likely to play offshore tax games that put investors at risk.”

The reason for the lack of tax payments seems to be down to a combination of profit shifting (to tax havens) and generous tax ‘incentive’ regimes provided to rich global corporations. Politicians and advocacy groups “will be re-energized to ask if revenue and profit are actually being booked where real economic value is being created,” said Paul Monaghan, chief executive of the Fair Tax Foundation, a UK-based group.