News Release

Study: 70% of Fortune 500 Companies Used Tax Havens in 2013

30 companies booked more cash offshore than others combined
FOR IMMEDIATE RELEASE

Tax loopholes encouraged more than 70 percent of Fortune 500 companies – including Avnet and Insight Enterprises in Arizona  – to maintain subsidiaries in offshore tax havens as of 2013, according to “Offshore Shell Games,” released today by the Arizona PIRG Education Fund and Citizens For Tax Justice. Collectively, the companies reported booking nearly $2 trillion offshore for tax purposes, with just 30 companies accounting for 62 percent of the total, or $1.2 trillion.

“Our tax code makes it too easy for American multinationals to dodge taxes by setting up shell companies in tax havens, which hurts Arizona taxpayers,” stated Dan Smith, Arizona PIRG’s Tax and Budget Advocate. “Our taxes help pay for roads, bridges, schools, and other public services. Loopholes need to be closed that allow some multinationals to skip out on paying their fair share for the services that helped them make their profits.”

“The loopholes in America’s corporate tax have grown so outrageous that our policymakers should be embarrassed,” said Steve Wamhoff, CTJ legislative director. “The data in this report demonstrate that a huge portion of the supposedly ‘offshore’ profits are likely to be U.S. profits that are manipulated so that they appear to be earned in countries like Bermuda or the Cayman Islands where they won’t be taxed. Policymakers should close the loopholes that make this manipulation possible.”

Every year, offshore tax loopholes used by U.S. corporations cost Arizona $286 million in state tax revenue.

The new study by the Arizona PIRG Education Fund and Citizens for Tax Justice shows that while most very large companies use tax havens, a smaller subset are most aggressive about using offshore tax havens to avoid taxes.

Companies headquartered in Arizona that were highlighted by the study include:

-       Avnet reported operating 50 tax haven subsidiaries in 2013, including three in the British Virgin Islands, two in Macau, and two in Switzerland. The company books 2.7 billion in profits offshore for tax purposes but does not disclose what it would pay in taxes if those profits were not booked offshore.

-       Insight Enterprises reported operating ten tax haven subsidiaries in 2013, including one in Switzerland and one in the Netherlands. The company books 72 million in profits offshore for tax purposes but does not disclose what it would pay in taxes if those profits were not booked offshore.

Key findings of the report include:

-       At least 362 Fortune 500 companies operate subsidiaries in tax haven jurisdictions, as of 2013. All told, these companies maintain at least 7,827 tax haven subsidiaries. The 30 companies with the most money booked offshore for tax purposes collectively operate 1,357 tax haven subsidiaries.

-        The 30 companies with the most money booked offshore for tax purposes collectively hold nearly $1.2 trillion overseas. That is 62 percent of the nearly $2 trillion that Fortune 500 companies together report holding offshore.

-        Only 55 companies disclose the amount they would expect to pay in U.S. taxes if they didn’t report profits offshore for tax purposes. All told, these 55 companies would collectively owe $147.5 billion in additional federal taxes. The average tax rate the 55 companies currently pay to other countries on this income is 6.7 percent, implying that most of it is booked to tax havens.

The report concludes that to end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency.

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