$51B of US corporate profit held in Cayman, says report

| 07/10/2015 | 4 Comments
CNS Business

Ugland House, Grand Cayman

(CNS Business): The latest report on the use of tax havens making headlines around the world claims that $51 billion of corporate profits for Fortune 500 companies made in 2014 is held in the Cayman Islands. Describing Ugland House in George Town as a symbol of the “excesses of the world of corporate tax havens”, the report states that US companies are still using offshore jurisdictions and that some $2.1 trillion of the profit generated by America’s largest corporations last year is held offshore.

The report, Offshore Shell Games 2015, was written and researched by Robert McIntyre and Richard Phillips from Citizens for Tax Justice and Phineas Baxandall from the US PIRG Education Fund.

It found that at the end of 2014 nearly 72% of the Fortune 500 were operating subsidiaries in tax haven jurisdictions and are holding more than $2.1 trillion in accumulated profits offshore for tax purposes. These 358 companies maintain at least 7,622 tax haven subsidiaries and around 60% of them have set up at least one subsidiary company in Bermuda or the Cayman Islands, which the report describes as “two particularly notorious tax havens”.

The report suggests that the multinational corpora­tions using tax havens have been able to avoid an estimated $90 billion in federal income taxes in the United States.

However, it also reveals that around 43% of the Fortune 500 have offshore subsidiaries in Netherlands, compared to just over 25% with subsidiaries in Cayman.

The latest research aimed at persuading Congress to close the tax loopholes that allow the country’s biggest profit generators to use offshore centres follows recent comments by British Prime Minister David Cameron about offshore transparency. Cameron has said his government would continue to pressure its crown dependencies and overseas territories to adopt a central beneficial ownership register to give easier access to the authorities, and possibly the public, to the details of the real owners of companies and other financial entities domiciled there.

Cayman has so far resisted pressure for a central or public register and has indicated that it already holds all of the necessary information on the beneficial owners of the financial entities domiciled here and has measures in place that already allow for the relevant authorities to access all of that information when necessary.

Offshore Shell Games 2015, The Use of Offshore Tax Havens by Fortune 500 Companies

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Category: Finance, Financial Services

Comments (4)

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  1. Garfield says:

    Too bad these people who wrote the report did not check out their own backyard at 1209 North Orange Street in Wilmington, Delaware. There they would find in a building, registered American Fortune 500 companies that have reduced their state taxes which they should have paid to the American states which they operate in to an estimated amount of approximately 10 billion U.S. Dollars over the past decade. An onshore tax haven if ever there was one the the USA.

    • Anonymous says:

      Sorry, but that’s not how state income taxes in the US work. Most states compute income attrbutable to actual operations in the state. That’s why companies sometimes move their operations to states with relatively low taxes. If your company’s business office is in Alabama, you will have to pay Alabama corporate tax whether you are incorporated in Delaware or Timbuktu.

      • Anonymous says:

        8:53, I can assure you that you are incorrect. There are ways around paying state corporate tax. For example, Pennsylvania, Texas and North Dakota are estimated to have lost over a billion dollars in state revenues in the past 5 years as the majority of oil shale and gas exploration companies in the oil & gas sector operating in those 3 states are registered in Delaware. Furthermore, intangible items such as trademarks, royalties and leases are not taxable in Delaware and can be counted as deductions in the above 3 states, reducing company’s taxes in those states.

        A number of American states have tried to block these tax loopholes unsuccessfully in the past. In fact, Senator Carl Levin of Michigan failed last year in adopting legislation in Washington that would demand that states collect information on the beneficial ownership of companies registered in their state borders.

        • Anonymous says:

          And, the North Orange Street building is home to something like 250,000 companies – not the biggest building in the word so would Obama call it a tax scam?….

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