Large multinational companies such as Microsoft and Hewlett Packard have used tax loopholes to avoid billions of dollars in income taxes over the last three years, according to a Senate committee report issued Thursday.
The report says multinationals dodge taxes by shifting profits to low-tax jurisdictions overseas and using loopholes to avoid taxes on repatriated income. The Senate Permanent Subcommittee on Investigations released the report ahead of a hearing Thursday at which representatives of Microsoft and Hewlett Packard were to testify.
The report says Microsoft used offshore tax avoidance strategies with subsidiaries in Puerto Rico, Ireland, Singapore and Bermuda to save at least 6.5 billion dollars in federal corporate income taxes.
Hewlett-Packard used a different tactic, according to the report. It created a series of occasional short-term internal loans with the apparent support of its auditor that allowed it to access offshore cash for domestic operations without paying taxes.
Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations, didn’t accuse the companies of acting illegally.
“Major US corporations are increasingly earning their profits here but shipping them overseas to avoid paying the taxes they owe,” Levin said in a news release.
“At a time when we face such difficult budget choices, and when American families are facing a tax increase and cuts in critical programs from education to health care to food inspections to national defense, these offshore schemes are unacceptable.” – DPA