Big 500 US firms hold $3 trillion overseas to avoid taxes: Study

An Apple employee using an iPhone 6s to take a wefie with people queueing inside its Sydney store. Apple holds US$181.1 billion (S$258 billion) offshore, more than any other US firm, and would owe US$59.2 billion in US taxes if it tried to return the
An Apple employee using an iPhone 6s to take a wefie with people queueing inside its Sydney store. Apple holds US$181.1 billion (S$258 billion) offshore, more than any other US firm, and would owe US$59.2 billion in US taxes if it tried to return the money in tax havens.PHOTO: EUROPEAN PRESSPHOTO AGENCY

WASHINGTON • The 500 largest American companies hold more than US$2.1 trillion (S$3 trillion) in accumulated profits offshore to avoid United States taxes and would collectively owe an estimated US$620 billion in taxes if they repatriated the funds, according to a study released yesterday.

The study, by two left-leaning non-profit groups, found that nearly three-quarters of the firms on the Fortune 500 list of biggest American companies by gross revenue operate tax-haven subsidiaries in countries like Bermuda, Ireland, Luxembourg and the Netherlands.

The Centre for Tax Justice and the US Public Interest Research Group Education Fund used the companies' own financial filings with the Securities and Exchange Commission to reach their conclusions.

Technology firm Apple was holding US$181.1 billion offshore, more than any other US company, and would owe an estimated US$59.2 billion in US taxes if it tried to bring the money back to the US from its three overseas tax havens, the study said.

The conglomerate General Electric has booked US$119 billion offshore in 18 tax havens, software firm Microsoft is holding US$108.3 billion in five tax haven subsidiaries and drug company Pfizer is holding US$74 billion in 151 subsidiaries, the study said.

"At least 358 companies, nearly 72 per cent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014," the study said.

"All told these 358 companies maintain at least 7,622 tax haven subsidiaries."

Fortune 500 companies hold more than US$2.1 trillion in accumulated profits offshore to avoid taxes, with just 30 of the firms accounting for US$1.4 trillion of that amount, or 65 per cent, the study found.

Fifty-seven of the companies disclosed that they would expect to pay a combined US$184.4 billion in additional US taxes if their profits were not held offshore.

Their filings indicated they were paying about 6 per cent in taxes overseas, compared to a 35 per cent US corporate tax rate, it said.

"Congress can, and should, take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets," the study concluded.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 07, 2015, with the headline 'Big 500 US firms hold $3 trillion overseas to avoid taxes: Study'. Print Edition | Subscribe