Eighty-three of the 100 largest publicly traded U.S. corporations in terms of 2007 revenue reported having subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions, according to a new report from the Government Accountability Office.
Many of the companies are federal contractors. Sixty-three of the 100 largest publicly traded U.S. federal contractors in terms of fiscal year 2007 federal contract obligations reported having subsidiaries in such jurisdictions, according to the GAO.
The GAO noted that corporations have foreign subsidiaries for a variety of business reasons, including sales opportunities, natural resources, favorable labor conditions or tax laws. In some cases, they have aggressively interpreted U.S. tax law relating to foreign subsidiaries. The Treasury Department has found that some U.S. corporations have aggressively set transfer prices to move income to offshore jurisdictions to avoid U.S. taxes. Some offshore jurisdictions have no taxes or only nominal taxes, and are sometimes referred to as tax havens.
The report provided a list of the companies and the number of their foreign subsidiaries. One of them is Bank of America, which received $20 billion from the Treasury Department's Troubled Assets Relief Program on Friday. It has 115 subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions, including 59 in the Cayman Islands.
"The issues involved in the cross-border arena, including those involving large U.S. corporations and their foreign subsidiaries, are some of the most complex that the service confronts," wrote Internal Revenue Service Commissioner Douglas Shulman in a letter accompanying the report. "I have made international issues like these a top priority for the IRS, in addition to our continued efforts confronting offshore tax evasion."
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