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GAO Report US Corporate Tax Dodgers

GAO Report US Corporate Tax Dodgers



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Published by Guy Razer
Citigroup has set up 427 subsidiaries in tax-haven countries, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands.
What an example!!
Citigroup has set up 427 subsidiaries in tax-haven countries, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands.
What an example!!

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Published by: Guy Razer on Jan 17, 2009
Copyright:Attribution Non-commercial


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Report to Congressional Requesters
United States Government Accountability Office
GAOINTERNATIONALTAXATIONLarge U.S.Corporations andFederal Contractorswith Subsidiaries in Jurisdictions Listed asTax Havens orFinancial Privacy Jurisdictions
December 2008GAO-09-157
What GAO Found
United States Government Accountability Office
Why GAO Did This Study
Accountability Integrity Reliability
December 2008
e U.
. Corporation
and Federal Contractor
in Juri
ted a
Tax Haven
orFinancial Privacy Juri
Highlights ofGAO-09-157, a report tocongressional requesters
Many U.S. corporations operateglobally and have foreignsubsidiaries. The subsidiaries maybe created, for example, to takeadvantage of sales opportunities orfavorable labor conditions. In somecases they may be used to reducetaxes. GAO was asked to update its2004 report on large federalcontractors with subsidiaries incountries sometimes called taxhavens because of low taxes and ageneral lack of transparency.In response, GAO determined howmany of the 100 largest publiclytraded U.S. corporations and the100 largest publicly traded U.S.federal contractors havesubsidiaries in jurisdictions listedas tax havens or financial privacy jurisdictions.GAO (1) combined three lists of such jurisdictions created bygovernmental, international, andacademic sources and (2) identifiedlarge publicly traded U.S.corporations and federalcontractors and the locations of their subsidiaries using the Fortune500 list, a federal contracting Website, and a Securities and ExchangeCommission (SEC) database.
Eighty-three of the 100 largest publicly traded U.S. corporations in terms of 2007 revenue reported having subsidiaries in jurisdictions listed as tax havensor financial privacy jurisdictions. Sixty-three of the 100 largest publicly tradedU.S. federal contractors in terms of fiscal year 2007 federal contractobligations reported having subsidiaries in such jurisdictions. Sincesubsidiaries may be established in listed jurisdictions for a variety of nontaxbusiness reasons, the existence of a subsidiary in a jurisdiction listed as a taxhaven or financial privacy jurisdiction does not signify that a corporation orfederal contractor established that subsidiary for the purpose of reducing itstax burden. GAO did not attempt to determine if corporations or contractorswith subsidiaries in such jurisdictions engaged in transactions with theirsubsidiaries to reduce their tax burden. In addition, the SEC only requires public corporations to report significant subsidiaries, so the number of subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions for each corporation or federal contractor may be understated inthis report.There is no agreed-upon definition of a tax haven or agreed-upon list of  jurisdictions that should be considered tax havens. However, variousgovernmental, international, and academic sources used similarcharacteristics to define and identify tax havens. Some of the characteristicsincluded no or nominal taxes; a lack of effective exchange of information withforeign tax authorities; and a lack of transparency in legislative, legal, oradministrative provisions. A few sources used terms such as offshore financialcenters or financial privacy jurisdictions to refer to jurisdictions with similarcharacteristics. Based on a review of a variety of sources, GAO identifiedthree lists of tax havens or financial privacy jurisdictions. The three sourcesGAO used are (1) the Organization for Economic Co-operation andDevelopment, (2) a National Bureau of Economic Research working paper,and (3) a U.S. District Court order granting leave for the Internal RevenueService to serve a “John Doe” summons. GAO combined the three lists intoone for the purposes of this report. GAO did not develop its own definition of tax haven or its own list of jurisdictions.In commenting on a draft of this report, the Department of the Treasuryexpressed concerns about GAO using a list of tax havens or financial privacy jurisdictions because there is no agreed-upon definition of tax havens or list of  jurisdictions. However, GAO noted that there is no agreed-upon definition orlist and also noted that the jurisdictions on the three lists used have similarcharacteristics. Further, background for one list said that industry analystsrecognize them as offshore tax haven or financial privacy jurisdictions andthat they are promoted as such.
To view the full product, including the scopeand methodology, click onGAO-09-157.For more information, contact James R. Whiteat (202) 512-9110 orwhitej@gao.gov.

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