Top 12 tax havens for US companies
US corporations are making record profits in tax havens like Bermuda, the Cayman Islands, and the British Virgin Islands (BVI). Some of the profits exceed the GDP of the host country, with Bermuda’s offshore profits 1643% of total economic output.
As a share of Gross Domestic Product (GDP), profits from subsidiary US companies operating in the Netherlands are more than 100 percent of the country’s annual economic output, according to a new study by Citizens for Tax Justice, published Tuesday.
In Bermuda, US companies reported $94 billion in profit, but the island’s GDP is only $6 billion.
The report draws on data collected by the US International Revenue Service from subsidiaries reporting profits outside of the US in 2010.
Clearly, American corporations are using various tax gimmicks to shift profits actually earned in the US and other countries where they actually do business into their subsidiaries in these tiny countries,” the report says.
US companies filed the largest profits in the Netherlands, Bermuda, Ireland, Luxembourg, the Cayman Islands, Switzerland, Singapore, the Bahamas, the British Virgin Islands, Cyprus, the Netherlands Antilles, and Barbados. But none of these finances are factored into the GDP of the host countries.
When filing US income taxes, a foreign corporation is defined if its US shareholders control more than 50 percent of the outstanding voting stock.
Offshore wealth –money that is kept abroad for tax purposes- is a popular tactic for American companies to avoid paying high taxes in the US. Google, Apple, and other hi-tech companies have all been accused of “sheltering” money abroad and not contributing enough to the American tax system, which is their main market.
Many US companies use a loophole called “repatriation” in order to delay paying the US government taxes. Under US tax law, companies with offshore subsidiaries can wait until their company is “repatriated”, or returned to the US, until they pay taxes. This tool encourages US companies to report profits outside of the US, where they are safe from high taxes.
