Professional Documents
Culture Documents
November 2, 2016
Despite being headquartered in California, less than 10% of Qualcomms cash and marketable
securities are held by U.S.-based entities. Tax Notes reported that Qualcomms Form 10-Q filed
with the SEC for the quarter ending June 26 read that Most of our cash, cash equivalents, and
marketable securities held by foreign entities are indefinitely reinvested and would be subject
to material tax effects if repatriated.
As explained in this Wall Street Journal article, claiming money is permanently or indefinitely
reinvested abroad allows corporations to avoid U.S. taxes on those funds.
Qualcomms press release about the purchase noted that: The offer will be described in more
detail in a tender offer statement on Schedule to be filed by a subsidiary of Qualcomm and a
solicitation/recommendation statement on Schedule 14D-9 to be filed by NXP.
It is likely that Qualcomm will use one of its existing foreign subsidiaries that hold some or all of
its foreign profits to make the purchase, or it could create a new foreign subsidiary to make the
purchase, which could later be liquidated leaving Qualcomm to hold NXP. As long as the
untaxed offshore profits are not repatriated to Qualcomm, the U.S. parent, the corporation can
avoid paying U.S. taxes on the profits. Using offshore funds for foreign acquisitions presumably
satisfies the permanently reinvested standard.
Corporations are seeking a huge cut in the tax rate charged on these offshore profits when
they are repatriated, as part of corporate tax reform. There is no economic rationale for the
U.S. government to forgive the taxes Qualcomm owes on past profits. These profits were
earned with an expectation that the maximum U.S. tax rate would be 35%, Clemente said.
Congress intended for the taxes on these earnings to be temporarily deferred, not forgiven.
U.S. multinational corporations now hold more than $2.5 trillion in earnings offshore, on which
they owe at least $700 billion in U.S. taxes. For a collection of data and charts on the offshore
profits held by U.S. multinational corporations, click here for the Corporate Tax Chartbook
produced by Americans for Tax Fairness and the Economic Policy Institute.
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Americans for Tax Fairness is a diverse coalition of 425 national and state endorsing
organizations that collectively represent tens of millions of members. The organization was
formed on the belief that the country needs comprehensive, progressive tax reform that results
in greater revenue to meet our growing needs. ATF is playing a central role in Washington and
in the states on federal tax-reform issues.
MEDIA CONTACT
Ron Eckstein, Communications Director, Americans for Tax Fairness
reckstein@americansfortaxfairness.org
(202) 454-6198 (o)
(917) 921-1212 (m)