Cash held offshore by international companies rises

2014 03 31 | Category: News

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Last year the largest U.S. based companies added $206 billion to their profits held in low-tax countries. That is almost 12 percent more than a year earlier according to data from 307 corporations.

The untaxed money keeps piling up and some of the U.S. corporations are choosing to bring it home, but borrowing for any domestic cash needs is preferred.

The famous cases are an Apple subsidiary earning $30 billion over the course of four years with no home for tax purposes and HP accessing its off-limits offshore cash with the help of loans.

Recently another practice has become somewhat popular with the large companies. They move their headquarters outside the country through mergers. Few weeks ago the world’s largest banana company through merger relocated from North Carolina to Ireland.

U.S. companies must pay taxes up to a 35 percent rate on profits they earn around the world. Taxes on foreign income do not have to be paid until the money is brought home.

Also companies do not have to assume they will pay taxes on profits they have reinvested outside the U.S. jurisdiction. Large amount of companies’ money is considered to be offshore for tax purposes. It is kept in segregated U.S. bank accounts.

EditorCash held offshore by international companies rises