Given the recent storm over Bermuda’s notoriety as a tax haven, it’s worth reblogging Withum on Wall Street’s sensible explanation of how companies like Apple and Google are able to keep overseas earnings outside of the US and not be taxed on them. It’s much easier to accuse them of being tax dodgers – the truth is less simplistic.
A recent Bloomberg article reported that the offshore cash hoard of U.S. multinational companies had risen by $206 billion last year as the companies continued to avoid U.S. taxation (see article here http://www.bloomberg.com/news/2014-03-12/cash-abroad-rises-206-billion-as-apple-to-ibm-avoid-tax.html). Personally, I find it amazing that the popular press and its American readership see prudent corporate tax planning as some sort of illicit tax dodge. Nevertheless, the thing that surprised me the most was that many of my clients read the article and called or wrote me asking why they too are not utilizing the same “loophole” that Apple and General Electric are gaming. My surprise was not that these honest business people wanted to engage in the same activity being portrayed in the press as scandalous (after all, everyone loves a loophole), I was surprised that they didn’t understand why the law worked for Apple but not for them.
The simple truth is, as…
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