US businesses are sheltering an increasing amount of money offshore from the taxman, with 46% of the estimated $233bn (£126bn) earned abroad by American-owned multinationals in 2001 being held in foreign tax havens, up from 38% in 1999 and 23% in 1988.
Link: US tax havens amnesty fails to deliver
The report from Martin A. Sullivan, an economist and columnist for TaxNotes, a daily journal on tax law and legal issues, said that 11 tax havens held this money, such as Luxembourg (0.9% of earnings) and the Cayman Islands (5.2%).
His analysis of recent Commerce Department data noted that these 11 countries, accounted for only 19% of the overseas economic activity of these companies, taking into account their assets, sales, costs of equipment, and number of employees. He said that big businesses are contributing less to the nation’s tax coffers; corporate taxes last year accounted for only 7.4% of total federal tax receipts, the second-lowest level on record behind 1983.
Meanwhile, US Treasury officials say fraudulent accounting has gone up and blame tracking problems on increased globalisation, and reporting laws that need reforming.
The US government wants to try and curb the sheltering and is investigating American companies that artificially prop up profits in low-tax countries.
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