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Companies Are Using Offshore Tax Havens

Offshore Account Update

Posted on December 29, 2017 |

The United States has one of the highest corporate tax rates in the developed world. Because taxes on businesses within the United States can be so high, many companies are proactive in finding ways to legally work within the tax code to protect their profitability by reducing the amount of taxes that are owed.

There are legal options to work within the tax code to reduce your company’s tax liability and you should work with a Boston business tax attorney in order to identify the best approach for you to take to keep the amount of taxes your company must pay to a minimum. 

Many Fortune 500 companies have chosen to use offshore tax havens as a part of their efforts to reduce or avoid taxes imposed by the United States government.  In fact, a recent report shows the majority of the companies on the Fortune 500 list used tax havens in 2016.

Most Fortune 500 Companies are Using Offshore Tax Havens

According to new research, 73 percent of the companies that are on the Fortune 500 list made use of offshore tax havens in 2016.  The total number of companies on the Fortune 500 list who avoided U.S. taxes through the use of offshore accounts was 366, the Public Interest Research Group (PIRG) discovered.  This means close to three out of four of the biggest companies had offshore accounts to reduce the amount of taxes owed to the United States government.

Companies are allowed to reduce the amount of taxes owed through the strategic use of offshore accounts because the United States tax code contains provisions that permit businesses to defer the payment of income taxes if profits are booked offshore.  Many companies are able to declare that profits were earned in other countries which have lower tax rates than the United States or which may not even charge taxes on the company’s profits at all.

To take advantage of the tax code provisions that make deferring taxes possible, the 366 companies on the Fortune 500 list which have offshore accounts collectively have at least 9,755 tax haven subsidiaries. 

Altogether, these 366 companies — through their offshore subsidiaries — have around $2.6 trillion in profits in offshore financial institutions.  This has made it possible for the companies to defer or avoid the payment of an estimated $752 billion in U.S. taxes.  A total of just four companies account for 25% of the trillions that are kept offshore, and just 30 of the Fortune 500 companies account for 68% or $1.76 trillion of the funds that are offshore.

While Fortune 500 companies have more profits to protect than most businesses and thus incentives are greater to find strategies to reduce taxes due, every company can benefit from working with Kevin Thorn, a Boston business tax attorney, to find ways to work within the tax code to reduce the substantial tax burden that the United States government imposes.  You should contact an experienced attorney today to talk with a legal professional about what your company can do to avoid paying more than it needs to in taxes next year.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989

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