US firms criticised for tax avoidance
Majority of large companies using offshore tax havens, new report says
Most Fortune 500 corporations have offshore tax haven units that they use to avoid paying US taxes through "accounting tricks", two left-leaning tax activist groups said.
US multinationals each year avoid paying about US$90 billion in federal income tax, the groups said in a report that comes amid increased attention to corporate tax avoidance worldwide.
"Many large, US-based multinational corporations avoid paying US taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens - countries with minimal or no taxes," said Citizens for Tax Justice (CTJ) and US Public Interest Research Group (PIRG).
About 72 per cent of Fortune 500 companies had subsidiaries in low-tax jurisdictions in 2013, with most of these units located in the Cayman Islands or Bermuda, said the report.
"These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity," it said.
Big corporations regularly defend their tax planning practices as legal and in the best interest of shareholders, who want companies to pay as little tax as possible.
But fiscal constraints facing many governments, as well as the increased aggressiveness recently of corporate tax-avoidance strategies, have fuelled a political backlash.