Biggest U.S. Firms Park $1.2 Trillion in Profits Offshore, Study Finds

By:  Jessica Holzer

Washington—The biggest U.S. companies, including General Electric Co. and Apple Inc., are parking nearly $1.2 trillion in profits offshore, according to a new report from a liberal advocacy group.

The report by U.S. PIRG, which analyzed the public filings of the top 100 U.S. publicly traded companies, also found that 82 companies maintain subsidiaries in low-tax jurisdictions located abroad.

The report comes as President Barack Obama calls for a corporate tax overhaul that could remove incentives for companies to park profits overseas. Governments across the globe are mobilizing to close loopholes in international tax rules that allow multinational companies to legally shift profits to places that impose little or no tax. Companies such as Apple, Google Inc. and Starbucks Corp. have come under fire from politicians in the U.S. and U.K. who say they use such strategies to avoid billions of dollars of taxes.

Earlier this month, the Group of 20 industrial and developing nations backed a plan developed by the Organization for Economic Cooperation and Development to overhaul international tax rules. The plan aims to plug holes in the web of bilateral tax treaties that allow companies to shift their profits to the lowest-tax jurisdictions, regardless of where those profits were earned.

U.S. law generally allows companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn't brought back to the U.S. When U.S. companies repatriate profits earned abroad, they are taxed at the U.S.'s 35% rate minus amounts they paid to foreign jurisdictions.

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