The largest U.S.-based companies added $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 $1.95 trillion outside the U.S., up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News. Three U.S.-based companies -- Microsoft Corp., Apple Inc. and International Business Machines Corp. -- added $37.5 billion, or 18.2 percent of the total increase.
That combination of policies provides an incentive for formerly U.S.-based companies such as Actavis Plc, Endo International Plc and Eaton Plc to move their headquarters outside the country through mergers. This week, Chiquita Brands International Inc., based in Charlotte, North Carolina, announced a merger with Fyffes Plc that would locate the world’s largest banana company in Ireland.
In his final message after more than eight years as chief executive officer of Qualcomm Inc., Paul Jacobs on March 4 gave shareholders what he called a “homework assignment.”
U.S. companies owe taxes up to a 35 percent rate on profits they earn around the world. They pay taxes in foreign countries and receive credits they can use to offset their payments to the Internal Revenue Service.
The U.S.-based companies don’t have to pay taxes on foreign income from active businesses until they bring the money home, which creates the incentive to reduce foreign taxes and leave profits offshore.