A group of major US technology and pharmaceutical companies have reduced their average tax rate by a quarter since 2006 as they deposited more cash offshore than all other US companies combined, according to the
The business daily reports that nearly US$500bn of offshore cash is held by a small group of 14 US tech and pharma groups. The
research finds that they paid an average overseas tax rate of just 10% in 2013. Over the past eight years, overall tax rates fell as their lightly-taxed foreign profits grew at nearly three times the pace of their foreign sales.
The paper reviewed the accounts of Apple, Microsoft, Google, Pfizer, Cisco Systems, Oracle, Qualcomm, Johnson & Johnson, Merck, Amgen EMC, eBay, Eli Lilly and Medtronic, which provided data on their offshore cash. Collectively they held US$479bn of offshore cash and equivalents at the end of their last financial year, or just over half of the US$947bn that credit ratings agency (CRA) Moody’s estimated was held by US non-financial companies. With Pfizer the one exception, all reported falls in their tax rates, which ranged from 10% to 66%.
American companies have lobbied for a temporary ‘tax holiday’ to encourage them to repatriate their profits to the US. However, earlier this week the US Joint Committee of Taxation, which provides Congress with non-partisan analysis, reported that any such move would cost the government US$96bn in lost revenue over a decade. It also warned of a potential “moral hazard” by signalling that tax holidays would become a regular part of the tax system.
Cash-flow based metrics now feature prominently alongside traditional revenue measures of business performance in the key figures or financial summary pages of any public company.
GTNews asks Pugsley about what advice she would give to treasurers dealing with mergers and acquisitions, what the key challenges for her year ahead will be and how she is selecting a treasury management system (TMS).
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
Tim de Knegt, strategic finance and treasury manager for the Port of Rotterdam, discusses how he is using blockchain, the challenges he will face in his role of treasury over the next 12 months and the advice he would give to someone starting out their career in treasury.