Senate Finance Committee Chairman Max Baucus, D-Mont., has launched an investigation into the tax practices of Transocean Ltd., the owner of the offshore drilling rig that exploded in the Gulf of Mexico this past April, leading to the disastrous oil spill.
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Baucus is looking into the U.S. tax implications of Transocean relocating its headquarters to the Cayman Islands in 1999 and to landlocked Switzerland in 2008. Transoceans questionable business practices may be at fault for costing lives and livelihoods on the Gulf Coast, and now there are questions regarding the oil companys tax practices as well, Baucus said in a statement.
The investigation will examine whether Transocean exploited current U.S. tax law by moving its headquarters overseas. Baucus noted that Transocean is still largely physically located in the U.S., but it moved its headquarters to the Cayman Islands over a decade ago, thus avoiding U.S. taxes, and has since relocated its headquarters to Switzerland.
After the move abroad, the company paid a tax rate of only 16 percent on the $4.4 million it made in global operating income last year, according to the Associated Press.
Baucus led the fight in the Senate to shut down a practice known as corporate inversion, and successfully passed the American Jobs Creation Act of 2004, which closed loopholes in the Tax Code that made corporate inversion possible.
Baucus sent a letter Wednesday calling on Transocean to provide detailed documents and explanations relating to the companys tax practices. The information will help the Finance Committee examine the tax benefits that Transocean received by exploiting loopholes closed by the American Jobs Creation Act of 2004 and determine whether further legislative action is necessary to prevent erosion of the U.S. tax base through corporate inversions.