Tuesday, 1 April 2014

Tax …..What’s That?



America Rewarded Corporations for Hiding Money

The American government seems to be rewarding tech giants, including Microsoft and Apple, who are known for avoiding paying tax by funnelling cash viatax havens like Ireland.The British Bureau of Investigative Journalism (BIJ) revealed that 4 of the biggest American technology groups collectively hold about $124 billion in US Treasury debt (much of it offshore), earning them tax-free interest.

In other words, Google,Microsoft, Apple, and Cisco Systems hold a large proportion of the $255 billion held in their foreign subsidiaries in US Treasuries. The tech giants can’t bring cash home and use it to help the government pay its debts – because this money would trigger a tax bill. As a result, the corporations prefer to keep it offshore.

American companies say that a "territorial" type of tax system could avoid double taxation and make sure all businesses compete on equal terms. Undoubtedly, this would also encourage companies to shift their revenues overseas. However, the status quo looks equally strange in that the government of the United States appears to reward tech giants for their tax avoidance.

According to a senior international tax policymaker, the American taxpayers paying interest to digital giants investing in American bonds was clearly “a bizarre situation”. Today there’s growing concern that the huge cash mountains held by the largest businesses worldwide may threaten global financial stability.

More than a thousand of the largest US non-financial companies hold $1.48 trillion in cash, according to Moody's, the credit rating agency. In the meantime, more than 20% of the US corporate cash pile is held by Google, Microsoft, Apple, and Cisco.

No comments: