Apple, IBM stash more profits overseas to avoid US taxes
The largest US-based companies added US$206 billion to their stockpiles of offshore profits last year, parking earnings in low-tax countries until Congress gives them a reason not to.
The multinational companies have accumulated US$1.95 trillion outside the US, up 11.8 per cent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News. Three US-based companies - Microsoft, Apple and International Business Machines - added US$37.5 billion, or 18.2 per cent of the total increase.
"The loopholes in our tax code right now give such a big reward to companies that use gimmicks to make it look like they earn their profits offshore," said Dan Smith, a tax and budget advocate at the US Public Interest Research Group.
Even as governments around the world cut tax rates and try to keep corporations from shifting profits to tax havens, the US Congress remains paralysed in its efforts. The response of US-based companies over the past few years has been to book profits offshore and leave them there.
Congress has not acted because of disagreements over whether to be tougher on US companies operating abroad amid broader disputes over government spending and taxation.
Meanwhile, the companies are deferring hundreds of billions of dollars in US taxes as they lobby to end a system they describe as a competitive disadvantage in world markets.
That increase was slower than the 15.9 per cent rise in stockpiled profits those same companies had the previous year.
Pfizer reported a decrease in offshore profits this year, and General Electric and Citigroup each reported growth of less than 3 per cent.