In order to avoid taxes at home jumped 93% to $2.1T in 2008-2013, research firm Audit Analytics has calculated. GE (GE) held the most amount of money abroad with $110B and Microsoft (MSFT) was second with $76.4B, after which comes Pfizer (PFE) with $69B, Merck (MRK) with $57.1B and Apple (AAPL) with $54.4B. The numbers have prompted fresh calls for an overhaul of the tax code.
It is important to note here that tax rate in US is 35%. However, as per the US law, US based corporations need not pay tax on overseas profits unless they repatriate such profits. In order to avoid high rates of tax in US, the profits stashed abroad have almost doubled from 2008 to 2013. However, one can hardly blame the corporations for tax avoidance in this case. All they are doing is working within the policy framework and putting the money where they feel can it can be most efficiently used. If something deserves blame, it is the flawed policies in the first place.
In an attempt to bring back the money, there is a proposal to scrap the law that allows income tax deferral. There are even talks of offering onetime tax holiday to incentivize companies to bring back foreign profits. But will these proposals be taken ahead? If one goes by history, chances of a significant change in tax code seem slim. The time and effort it takes to clear the mess should be a lesson for all policymakers to come up with efficient policies in the first place, without leaving loopholes.
It is important to note here that tax rate in US is 35%. However, as per the US law, US based corporations need not pay tax on overseas profits unless they repatriate such profits. In order to avoid high rates of tax in US, the profits stashed abroad have almost doubled from 2008 to 2013. However, one can hardly blame the corporations for tax avoidance in this case. All they are doing is working within the policy framework and putting the money where they feel can it can be most efficiently used. If something deserves blame, it is the flawed policies in the first place.
In an attempt to bring back the money, there is a proposal to scrap the law that allows income tax deferral. There are even talks of offering onetime tax holiday to incentivize companies to bring back foreign profits. But will these proposals be taken ahead? If one goes by history, chances of a significant change in tax code seem slim. The time and effort it takes to clear the mess should be a lesson for all policymakers to come up with efficient policies in the first place, without leaving loopholes.
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