Intel, Oracle and Seagate chase the sun
On Monday, President Barack Obama announced a proposal to outlaw
techniques used by U.S. corporations to avoid taxes by incorporating in
offshore locations. Under the proposal, about $190 billion in previously untapped taxes would be raised over the next decade.
Several IT companies would be affected by the administrations plans to
target offshore tax havens, most notably Seagate, Intel and Oracle. For
example, Bloomberg claims Seagate is paying 5 percent corporate tax in
the Caymans, while the U.S. corporate tax is 35 percent. More
interestingly, in a recent filing with the SEC, Seagate lists its
corporate HQ in
South Church Street, George Town, the capital of the Cayman Islands.
Intel is also using the Caymans to avoid U.S. taxes. Intel said yesterday that Obama's proposal is being studied. "Particularly
with
taxes, the devil's in the details," says Intel spokesman Chuck Mulloy.
He adds that Intel pays U.S. taxes on interest earned by its Cayman
subsidiaries.
Oracle did not comment the issue at this point, but it seems to be enjoying the Caribbean as well.
The building in South Church
Street, known as Ugland House, is the official address for 18,857
corporations. It is listed as Seagate's HQ in SEC filings. The not so
ugly Ugland house was even mentioned by Obama during his recent speech.
"On the campaign, I used to talk about the outrage of a building in
the Cayman Islands that had over 12,000 businesses claim this building
as their headquarters," Obama said. "And I've said before, either this
is the largest building in the world or the largest tax scam. And I
think the American people know which it is: The kind of tax scam that
we need to end."
Other U.S. companies using the Caymans to save some tax dollars include
Coca Cola, Altria, Tyco and thousands of smaller companies. At the moment, this practice,
although very unpopular in the general public, is perfectly legal. However, if Obama has his way, basking in the Caribbean sun could cause some serious and costly sunburn.
More here.