How Offshore Tax Havens Save Companies Billions

[The Straight Story]

How Offshore Tax Havens Save Companies Billions

The top corporate income tax level in the United States is 35 percent. In the United Kingdom, it's 28 percent. But in Ireland, it's only 12.5 percent, and in Bermuda there's no corporate income tax at all. That means multinational companies that shift their earnings through Ireland or Bermuda can save billions of dollars in taxes each year.

On today's Fresh Air, Bloomberg News reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by hundreds of millions — and in some cases, billions — of dollars by taking advantage of offshore tax havens.

In October, Drucker reported that Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called "the Dutch Sandwich" and "the Double Irish" arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in taxes.

"You have an Irish operating company out there selling ads — they actually have real employees in Dublin," he explains. "They make payments to a Dutch subsidiary with no employees, which in turn makes payments to a Bermuda-headquartered Irish company with no employees. And the result of all of this is that it all helps to cut about $3 billion in Google's income taxes in the last three years."

http://www.npr.org/2011/03/17/134619750/how-offshore-tax-havens-save-companies-billions

[IndyPragmatist]

1. If we were smart, we would lower corporate tax rates...

and raise personal income taxes to offset it. But neither party will do that. The Reps will just cut corporate taxes with no offset in personal taxes. And the Dems would never lower taxes on the "evil" corporations.

Yay for a two party system!

[valerief]

2. All supported by our bought-and-paid-for Kochgress. nt