Bermuda Named In Congressional Tax Studies
The tax bills of US multinationals have dropped sharply in recent years because corporations are off-shoring profits in advantageous tax jurisdictions like Bermuda.
Research firm S&P Capital IQ said companies included in the Dow Jones industrial average — a select group with representatives from most major business sectors — are paying about half the US Federal tax rate they were in the late 1960s.
In the late 1960s they were paying 25-50 percent of their worldwide profits to the Internal Revenue Service, according to a report in “The Washington Post” today [Mar.27].
The biggest change over the years, studies indicate, isn’t the corporate tax rate, although that has diminished sharply with the top rate falling from 48 percent in 1971 to the current 35 percent.
The more significant change is the globalisation of the multinationals and their understanding of how to move profits to show up in countries with advantageous rates, the “Post” said.
A study by the Congressional Research Service released in January revealed that among US multinational corporations in 2008 more than 40 percent of their overseas profits were reported in Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland — countries that are neither production centres nor the location of most of their overseas administrative employees.
A study by the Congressional Subcommittee on Investigations said that corporate profits reported in 2008 in Bermuda came to 1,000 percent of the island’s gross domestic product.
Nine years before that, profits reported in Bermuda came to 260 percent of the country’s GDP, the report said.
