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US federal contracts denied to firms in ‘tax havens’

| 14/07/2014 | 0 Comments

(CNS Business): The Cayman Islands and Bermuda were targeted by  the US House of Representatives Congress last week when it voted to prevent companies that moved to the two jurisdictions from the US from winning certain energy and water federal contracts. Other low-tax counties, such as Ireland and Switzerland, were not included in the amendment to US federal funding measures.

If the amendment is passed by the Senate and becomes law, it would block contracts under the Energy and Water appropriations bill but would apply only to the 2015 fiscal year, which runs from this 1 October 2014 to 30 September 2015.

A congressional panel estimated this year that without a change to the US tax code, the US Government may lose an additional $19.5 billion in lost tax as more companies move offshore.

The amendment was sponsored by two House Democrats, Rep Rosa DeLauro of Connecticut and Rep Lloyd Doggett of Texas.

“Some companies send their tax dollars to support our infrastructure and military, while others just send a post card that says, ‘You can find me in Bermuda or the Caymans. Glad you are not here,'” said Doggett in a joint statement with DeLauro in June announcing the full House approval of the amendment.

DeLauro pointed to the US services that these off-shore companies enjoy while avoiding paying for them with their taxes.

He said in the statement, “The profits Fortune 500 companies claim were earned in Bermuda and the Cayman Islands in 2010 totaled over 1,600 percent of these countries’ entire yearly economic output. It defies logic to believe these companies conducted such a large amount of business there.

“They take advantage of our education system, our research and development incentives, our skilled workforce, and our infrastructure, all supported by US taxpayers, to build their businesses, and then turn around and abuse tax havens. These companies should not be allowed to pretend they are an American company when it is time to get federal contracts, then claim to be an offshore company when the tax bill comes.”

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Category: Finance, Financial Services

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