A New Jersey business tax attorney can provide assistance to companies who want to understand how they can legally work within the parameters of the U.S. tax code to reduce the amount of taxes that are due. The United States has one of the world’s highest corporate tax rates, so many organizations take steps to try to limit their tax burden. This is true of companies of all sizes, but especially of Fortune 500 companies.
In fact, recent research showed that the vast majority of Fortune 500 companies have taken steps to reduce their tax obligations by keeping money in offshore financial institutions.
The Majority of Fortune 500 Companies Have Money Offshore
According to the Public Interest Research Group, which conducted research into the use of offshore accounts by large business organizations, an estimated 366 companies on the Fortune 500 list made use of tax havens in 2016 in order to limit the taxes that are due to the United States government.
These 366 companies make up 73% of the Fortune 500 list, which means close to three out of four companies on the Fortune 500 List have funds offshore. Collectively, the total amount of cash that the companies are keeping offshore totals around $2.6 trillion.
Companies can keep all of this money offshore because the United States tax code does not require businesses to immediately pay taxes on profits that are booked offshore. As long as corporations do not repatriate the money to the United States, if the money was earned offshore, the company can defer taxes on the profits indefinitely.
The 366 companies on the Fortune 500 list who are keeping their money offshore collectively have an estimated 9,755 subsidiaries so they can classify their profits as belonging to these offshore subsidiaries and thus can defer U.S. taxes.
The companies on the Fortune 500 list are saving a substantial amount in taxes by keeping their money offshore. In fact, they are saving an estimated $725 billion in taxes that would otherwise be due to the United States government, according to the Public Interest Research Group.
Four large companies— Apple, Microsoft, Pfizer, and General Electric — account for around 1/4 of the total amount of offshore cash that Fortune 500 companies are keeping in foreign financial institutions. A total of just 30 of the Fortune 500 Companies account for 68 percent of all of the money being kept offshore, or around $1.76 trillion in total profits kept offshore.
While these companies have much larger profits than most and have a lot more spare cash they can park offshore to reduce taxes, most business organizations of all sizes can take steps to reduce the amount of taxes due. You should work with a New Jersey business tax attorney like Kevin Thorn to find legal options within the tax code to reduce the amount of taxes your company owes so your business can be competitive even with the high corporate tax rate in the United States. Call attorney Thorn today to get help saving on taxes in the New Year.
