Everything You Need to Know About Companies Leaving America for Taxes Pat Regnier @PatRegnier Sept. 23, 2014 The Obama administration is trying to stop corporate "inversions." A closer look at how they work, and what the Treasury is doing about them. Hey, If Companies Can Change Their Citizenship To Get a Tax Break, Why Can't I? In the midst of a wave of U.S. companies including Burger King, Medtronic and AbbVie moving to foreign locales, the Treasury Department announced Monday new rules to make it harder for a corporation to save on taxes by changing its home address. For many Americans, the idea that a company can reduce what it owe to Uncle Sam just by leaving is frustrating, but also, frankly, a bit baffling. The way most of these deals work is that a big American company buys a smaller foreign one. But then the org chart flips over: The little foreign company's headquarters become, at least on paper, the HQ of the new global company. The large American company is now a foreign one, and taxed according to that country's rules. What does that change about how the company is run? Does it mean American jobs are going overseas? A tax inversion doesn't have to change much at all about how the company is run, or where anybody works. It's really just a change of official address. Tellingly, the U.S.-based pharma company AbbVie , which is acquiring Shire as part of an inversion move, is moving its HQ to the island of Jersey. The British Crown dependency is not really a hub for… well, much of anything. Besides really attractive tax laws. Wait, it can't possibly be that easy–you mean you just buy a foreign company and now you don't have to pay U.S. taxes? You're right, it's not that simple. This move only changes the taxes U.S. companies owe on their foreign profits. The United States has what's known "worldwide" taxation, meaning that corporations owe income taxes on profits wherever they earn them. Many other countries only tax income earned in that country. As explained here by economist Kimberly Clausing in a paper for the Tax Policy Center, companies get a credit on their U.S. taxes to offset taxes paid abroad, so that they aren't liable twice on the same income. Still, U.S. corporate rates, which go up to 35%, are often higher than what's owed to other governments. So by inverting, the company can pay less tax on its foreign income. But the company still owes taxes on whatever profits it earns in the U.S. So, for example, when Burger King acquired Canadian doughnut chain Tim Hortons and moved its HQ north, it didn't automatically get out of paying American taxes on Whoppers sold in Dayton and Miami and L.A. It did, however, ensure it won't owe the IRS anything on doughnut profits in Ontario and Quebec. And if the company expands to new countries, moving its address out of the U.S. will have given it even more tax savings. If inverted companies are still paying U.S. taxes on the business they do here, is this really such a problem? Ah, but wait, there's more. Enter the very clever accountants. There may be ways for a multinational company to shift its income around to lower its taxes on U.S. profits. As Stephen Shay of Harvard Law has explained, an inverted company, now that it's foreign, can make a loan to its U.S. unit. That moves money from the U.S. business to the foreign parent, while the interest payments reduce its taxable U.S. income. The move can also help a company get out of paying taxes it otherwise would have owed on past profits. Companies generally don't have to pay taxes on foreign earnings until they bring them back to the U.S., for example to pay to shareholders in the form of dividends or stock buybacks. As a result, many global companies have built up billions in assets abroad. But after an inversion, notes Clausing, the new company can use loans between foreign affiliates in a game of "hopscotch" that effectively allows the new, foreign parent company to get its hands on the money without creating a U.S. tax liability. Bottom line: Though inversions probably don't cost American jobs, they do reduce tax revenues.
What does the White House want to do about it? As Fortune reports, Treasury Secretary Jacob Lew says new Treasury regulations will make inversions less attractive for companies. First, it will crackdown on the "hopscotch" move, making it harder for a company to avoid taxes when turning money from foreign subsidiaries into cash that can go shareholders. It will also strengthen an existing "80% rule," which says the American company's value must be less than 80% of that of the new, combined company. (In other words, a company can't invert by buying just any tiny little foreign firm–it has to find a merger partner that would make up 20% of the combined corporation.) Companies were getting around that rule, the Treasury says, with accounting moves to deflate the value of the U.S. company or inflate the size of the foreign one.
Shouldn't, um, Congress be handling this? Everybody on the Hill says inversions are just a symptom of a messed up tax code. The trouble is Republicans and Democrats are sharply divided on how to fix it. The GOP wants to move away from the worldwide tax system to a "territorial" one, so taxes are owed based on where they are earned. This would end inversion by making it unnecessary–a company's foreign earnings would be free from U.S. taxes no matter where they kept their headquarters. Democrats have generally opposed this, preferring to impose new rules making it harder to use foreign subsidiaries as tax havens. Lawmakers in both parties have proposed cutting the top corporate rate.
高盛利用税收倒置称霸并购领域 作者: Stephen Gandel 时间: 2014年07月31日 通过为公司提供建议，让它们将总部迁到海外以规避美国的税收——这项业务给高盛带来了超过2亿美元的收入，超过其他任何一家华尔街公司。对高盛（Goldman Sachs）来说，税收倒置（tax inversion）一直都是一门赚钱的好生意。这家投资银行的业务之一是为公司提供建议，让它们通过有争议的收购活动将总部迁至海外，进而规避美国的税收——这项业务给高盛带来的收入超过了其他任何一家华尔街公司。汤森路透（Thomson Reuters）的数据显示，三年半以来，通过告诉别的公司如何借助收购来少给美国做贡献，高盛获得的手续费已经超过了2亿美元。高盛当然不是税收倒置的唯一受益者。紧随其后的是摩根大通（JPMorgan Chase），这项业务为它带来了1.85亿美元收入。《纽约时报》（The New York Times）周二指出，整体而言，华尔街公司通过这项业务获得的手续费收入已经接近10亿美元大关。此外，别忘了参与这些收购活动的律师事务所和其他咨询机构收取的那些手续费。通过充分参与税收倒置，今年高盛得以重新成为并购咨询领域的王者。富国银行（Wells Fargo）指出，截至7月中旬，高盛在今年全球已经完成的并购交易中占据了几乎30%的份额。这帮助它巩固了榜首位置，继续领先于摩根士丹利（Morgan Stanley）。去年此时，高盛在并购领域的表现稍逊于摩根士丹利。不过，如果按照已公布的并购项目数量计算，去年排名靠前的还是高盛。在业绩电话会议上，摩根大通首席执行官吉米•戴蒙在回答《财富》（Fortune）杂志记者提问时为税收倒置业务点了个赞。他说，只要美国的税率继续高于其他国家，美国公司就可以迁到别处。他把这样的举措比作消费者到沃尔玛（Wal-Mart）购物，因为那里的商品看起来比别处便宜。高盛首席执行官劳埃德•布兰克梵似乎从未就税收倒置问题发表过类似言论，他既不支持，也没有表示过反对。两年前，就在美国行将跌落财政悬崖之际，布兰克梵在《华尔街日报》（Wall Street Journal）上发表社论称，美国政府需要提高税收。他说，奥巴马总统已经表示愿意敲定企业税收改革方案，同时呼吁企业领导人跟总统携手合作。但双方一直未能就此达成共识。作为避开美国国税局（IRS）的一种方法，税收倒置日益受到美国公司欢迎，但对这种做法的审查也越发严格。《财富》杂志高级编辑艾伦•斯隆最近表示，那些进行税收倒置活动的公司高层采用了一种"不利于美国的积极方式"。此外，斯隆指出，这种行为削弱了美国的税收基础，对所有股东来说是个长期不利因素。大家知道还有谁对税收倒置感到担心吗？高盛的经济学家们。该公司在最近发布的报告中提到了自己可能给美国政府造成了多少税收损失。真应该把这篇报告拿给那些投行人士看看。(财富中文网)译者：Charlie
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