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Reply #15: Not only do they get out of paying taxes, many corporations move their cash offshore. [View All]

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Octafish Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Apr-15-11 11:58 AM
Response to Reply #9
15. Not only do they get out of paying taxes, many corporations move their cash offshore.
Another major story my noosepaper and tee vee, missed or failed to mention prominently, if at all:

Corporate Profits Take an Offshore Vacation
Analysis by Lucy Komisar

NEW YORK, Feb 23, 2007 (IPS) - Last week, Merck, the pharmaceutical multinational, announced that it will pay 2.3 billion dollars in back taxes, interest and penalties in one of the largest settlements for tax evasion the U.S. Internal Revenue Service (IRS) has ever imposed.

Merck had cooked its tax books by moving ownership of its drug patents to its own Bermuda shell company - an entity that has no real employees and does no real work - and then deducting from U.S. taxes the huge royalties it paid itself. While setting up a shell company is not inherently illegal, it is if tax authorities determine that its only purpose is to evade taxes. Bermuda is a tax haven that has no levy on royalties.

Merck also faces legal action in Canada for 1.8 billion dollars in back taxes and interest.

What Merck did isn't unusual but in fact is becoming common for multinationals in the era of globalisation. It's one of the ploys in a corporate bag of tricks called profit laundering. A company figures out how to move its book profits offshore so it can evade millions and even billions in taxes to the country where it really operates. In an era where much of a company's assets may be intangible intellectual property - patents, logos, manufacturing processes - this strategy can make reported profits and taxes disappear.

People understand that nations' economies are hurt when jobs move overseas. But what happens when intellectual capital, on which the increasingly knowledge-based economy depends, is also moved out?

CONTINUED...

http://ipsnews.net/news.asp?idnews=36710
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