Do owners benefit from offshoring?

[Wyatt earp]

Hutch, explain the tax haven please.

I'm not certain on this, but I believe I read at one time, that if the American Company creates a subsidiary overseas, and puts or leaves their company profits there, instead of bringing them home, their profit is not taxed.

And what this does is keep companies searching for the next foreign place to make their goods....to avoid taxes by using this loophole....a loophole that makes US Citizen workers appear and be, more expensive...when it truly isn't worker salaries in the USA, but the new tax loop hole of...when manufacturing in foreign countries, their profits are not taxed.

I could be wrong on this so I will let Hutch or anyone else, correct me!!!

How is that a loop hole?

They just don't want to be taxed twice.

Double Tax Treaty | Tax Strategies | Delvalle Law Firm Panama

Double Tax Treaty - an international agreement to avoid paying twice

One of the main benefits that Panama offers to foreign companies which invest in this country is the double tax treaty. This measure was taken to fulfill the requirements requested by the Organization for Economic Cooperation and Development (OECD) and allows foreign entrepreneurs to avoid double taxation, both in Panama and in their country of origin, for the income earned in the country of residence.

Double taxation occurs when both countries consider that they have the right to tax a particular income. In that way, the same profit can be taxed by more than one country. To solve this issue, countries conclude waiver agreements which state that either only one of the countries will charge taxes on a certain earning or both countries will charge a shared tax on said earning. This shared tax agreement involves the creation of mechanisms to recognize in one country the tax paid in the other country allowing businesses to demand tax credit from their governments.

 

[EdwardBaiamonte]

MBAs have access to the top of the pyramid and shit flows down.
.

no idea why you are talking about MBA's. Do you have any idea what your subject is??

 

[Wyatt earp]

It gives an advantage to big business, who can have an entire department within their corporations dedicated to acquiring Letter of Credits for the overseas purchases and also an entire team of Americans parked in the foreign nation to oversea the production and quality control of the manufacturer making their goods.

So this advantage hurts the small businesses that operate solely here in the USA without the ability to go overseas themselves for cheaper goods....and they accounted for 80% of our employers at one time....probably less now, and even lesser as time goes on.

Also, every job that moves overseas, is a job lost in the USA.... that isn't good for anyone, in the LONG RUN.

Small bussiness in America is more then 80% today


Small Business & Entrepreneurship Council


Small businesses make up: 99.7 percent of U.S. employer firms, 64 percent of net new private-sector jobs, 49.2 percent of private-sector employment, 42.9 percent of private-sector payroll,46 percent of private-sector output, 43 percent of high-tech employment, 98 percent of firms exporting goods.

 

[eagle1462010]

Corporate Inversion Definition | Investopedia

BREAKING DOWN 'Corporate Inversion'
Corporate inversion is one of the many strategies companies employ to reduce their tax burden. One way that a company can re-incorporate abroad is by having a foreign company buy its current operations. Assets are then owned by the foreign company, and the old incorporation is dissolved.

For example, take a manufacturing company that incorporated itself in the United States in the 1950s. For years the majority of its revenue came from U.S. sales, but recently the percentage of sales coming from abroad has grown. Income from abroad is taxed in the United States, and U.S. tax credits do not cover all taxes that the company has to pay abroad. As the percentage of sales coming from foreign operations grows relative to domestic operations, the company will find itself paying more U.S. taxes because of where it incorporated. If it incorporates abroad, it can bypass having to pay higher U.S. taxes on income that is not generated in the United States. This is a corporate inversion.

Corporate inversion is not considered tax evasion as long as it doesn’t involve misrepresenting information on a tax return or undertaking illegal activities to hide profits.

 

[eagle1462010]

US closes loopholes to curb corporate tax inversions

The move to close loopholes that encourage US companies to merge with a foreign firms and relocate their tax residences offshore could stifle takeovers announced this year worth hundreds of billion of dollars.

Those include several high-profile medical industry deals, including AbbVie's $55 billion purchase of Shire and Medtronic's $43 billion merger with Covidien, as well as Burger King's$11 billion tie-up with Tim Hortons, and Chiquita Banana's proposed $1 billion merger with rival Fyffes.

The Treasury said it was moving after Congress failed to act on the issue.

"We cannot wait to address this problem," said Treasury Secretary Jacob Lew.

"These first, targeted steps make substantial progress in constraining the creative techniques used to avoid US taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and, when possible, stopping them altogether."

The measures take aim particularly at expectations that a company, after an inversion, would be able to take advantage of earnings accumulated and held by the US partner offshore without ever paying taxes on it.

Currently many US companies retain substantial foreign earnings offshore to avoid taxes they would have to pay upon repatriating them into the United States.



- Corporate Deserters? -



Inversion deals, with the US company redomiciling itself to the home of the other partner in the deal, ostensibly allowed the new "foreign" firm to take control of those earnings and use them, even in the United States, without paying taxes on them.

 

[Care4all]

Hutch, explain the tax haven please.

I'm not certain on this, but I believe I read at one time, that if the American Company creates a subsidiary overseas, and puts or leaves their company profits there, instead of bringing them home, their profit is not taxed.

And what this does is keep companies searching for the next foreign place to make their goods....to avoid taxes by using this loophole....a loophole that makes US Citizen workers appear and be, more expensive...when it truly isn't worker salaries in the USA, but the new tax loop hole of...when manufacturing in foreign countries, their profits are not taxed.

I could be wrong on this so I will let Hutch or anyone else, correct me!!!

How is that a loop hole?

They just don't want to be taxed twice.

Double Tax Treaty | Tax Strategies | Delvalle Law Firm Panama

Double Tax Treaty - an international agreement to avoid paying twice

One of the main benefits that Panama offers to foreign companies which invest in this country is the double tax treaty. This measure was taken to fulfill the requirements requested by the Organization for Economic Cooperation and Development (OECD) and allows foreign entrepreneurs to avoid double taxation, both in Panama and in their country of origin, for the income earned in the country of residence.

Double taxation occurs when both countries consider that they have the right to tax a particular income. In that way, the same profit can be taxed by more than one country. To solve this issue, countries conclude waiver agreements which state that either only one of the countries will charge taxes on a certain earning or both countries will charge a shared tax on said earning. This shared tax agreement involves the creation of mechanisms to recognize in one country the tax paid in the other country allowing businesses to demand tax credit from their governments.

It's more complicated than my synopsis, this is just one of the scenarios

The double Irish arrangement is a tax avoidance strategy that some multinational corporations use to lower their corporate tax liability. The strategy uses payments between related entities in a corporate structure to shift income from a higher-tax country to a lower-tax country. It relies on the fact that Irish tax law does not include US transfer pricing rules.[1] Specifically, Ireland has territorial taxation, and hence does not levy taxes on income booked in subsidiaries of Irish companies that are outside the state.

The double Irish tax structure was pioneered in the late 1980s by companies such as Apple Inc..[2] In 2010 a law intended to counter such arrangements was passed,[where?] though existing arrangements were exempt and lawyers have said that this change will cause no significant problems for multinational firms.[3]

In 2013, the Irish government announced that companies which incorporate in Ireland must also be tax resident there. This counter-measure took effect in January 2015, for newly-incorporated companies, and will take effect in 2020 for companies with existing operations in Ireland.[4] Irish Finance Minister Michael Noonan, during the presentation of his 2015 budget, said that he believed this would align Ireland's corporate tax regime with international best practice.[5]

Overview
Typically, the company arranges for the rights to exploit intellectual property outside the United States to be owned by an offshore company. This is achieved by entering into a cost sharing agreement between the US parent and the offshore company, written strictly in terms of US transfer pricing rules. The offshore company continues to receive all of the profits from exploitation of the rights outside the US, but without paying US tax on the profits unless and until they are remitted to the US.[6]

It is called double Irish because it requires two Irish companies to complete the structure. One of these companies is tax resident in a tax haven, such as the Cayman Islands or Bermuda. Irish tax law currently provides that a company is tax resident where its central management and control is located, not where it is incorporated, so that it is possible for the first Irish company not to be tax resident in Ireland. This company is the offshore entity which owns the valuable non US rights that are then licensed to a second Irish company (and this one is tax resident in Ireland) in return for substantial royalties or other fees. The second Irish company receives income from the use of the asset in countries outside the US, but its taxable profits are low because the royalties or fees paid to the first Irish company are tax-deductible expenses. The remaining profits are taxed at the Irish rate of 12.5%.

For companies whose ultimate ownership is located in the United States, the payments between the two related Irish companies might be non-tax-deferrable and subject to current taxation as Subpart F income under the Internal Revenue Service's Controlled Foreign Corporation regulations if the structure is not set up properly. This is avoided by organizing the second Irish company as a fully owned subsidiary of the first Irish company resident in the tax haven, and then making an entity classification election for the second Irish company to be disregarded as a separate entity from its owner, the first Irish company. The payments between the two Irish companies are then ignored for US tax purposes.[1]

There are more ways and info at the link

Double Irish arrangement - Wikipedia, the free encyclopedia

 

[EdwardBaiamonte]

allowed the new "foreign" firm to take control of those earnings and use them, even in the United States, without paying taxes on them.

yes thanks to inversions we actually help get investments into the country!! Thanks to stupid stupid liberals US companies have a million reasons to move out.

 

[Dont Taz Me Bro]

Liberals are very very stupid

When did you become a liberal?

 

[eagle1462010]

allowed the new "foreign" firm to take control of those earnings and use them, even in the United States, without paying taxes on them.

yes thanks to inversions we actually help get investments into the country!! Thanks to stupid stupid liberals US companies have a million reasons to move out.

In other words...........they benefit from Inversion..........

If you want to discuss tax rates and regs that help drive them away, I'm on board with that.........If they are hauling ass with their investment capital and we are losing it then common sense is to lower that rate to get the money Invested here.

I mentioned Inversion because I saw how they were doing these things.............I gave an example of that..........

Want to talk Tariffs...........Yep....you leave I'll tariff you on the way back.. Enjoy your new home in China...........

If you Invert to China do your eyes slant.

 

[eagle1462010]

http://time.com/money/3378719/corporate-tax-inversions-leaving-america/

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.

 

[Jomama]

Nice summary.

Personally I think the US should price itself like a premium product. We can get more taxes (ie. your...making it harder to use foreign subsidiaries as tax) and we should. Why not, we have a massive debt to pay down. And who other than the US can offer what every global business wants; access to our massive, wealthy and growing market, a sound, stable and secure nation with an excellent corporate legal system, strong anti-corruption laws, strong currency, a global financial center, a century of cheap fossil fuels, and a pro-govt mindset.

Why shouldn't we have the highest prices? We're the Rolls Royce of nations.

Ed, since you've never been an entrepreneur, you may not understand this sort of thinking.

 

[EdwardBaiamonte]

In other words...........they benefit from Inversion..........
.

what???? Do you mean employees, management, owners, customers??
Great changes like inversions cost a fortune thanks to libnazi bureaucracies, rules and regulations. Everybody would benefit tremendously if idiot liberals would just eliminate the corporate tax and thus force businesses to focus on efficiency rather than tax avoidance.
Do you have the IQ to understand?

 

[EdwardBaiamonte]

....If they are hauling ass with their investment capital and we are losing it then common sense is to lower that rate to get the money Invested here.
.

1) too bad liberals are stupid and don't have common sense.
2) too bad they are too stupid to know that tax costs like any costs are passed on to customers and so a huge waste of precious national resources as corporations are forced to move off shore to avoid them!

 

[EdwardBaiamonte]

.......

Want to talk Tariffs...........Yep....you leave I'll tariff you on the way back.. .

dear we live in freedom. We don't want libNazis taxing the American people when corps go off shore to serve the American people with lower prices that raise our standard of living.

Did you ever think of college and Econ 101??

 

[EdwardBaiamonte]

Everybody on the Hill says inversions are just a symptom of a messed up tax code.

you mean a symptom of a stupid liberal tax code!! GE has 1000 full time tax professionals. The corporate tax should be eliminated so GE thinks about being efficient in delivering its great products to the world and not about avoiding stupid liberal taxes.

Do you understand?

 

[EdwardBaiamonte]

Democrats have generally opposed this, preferring to impose new rules

in other words Democrats are stupid and want to make 150 LBS of tax codes 160 in hope they can finally manipulate the system to get the result they want!! Remember the soviets and Red Chinese imposed new rules until 120 million people finally starved to death.

 

[EdwardBaiamonte]

Why shouldn't we have the highest prices? We're the Rolls Royce of nations.

30% of our kids live in poverty and they can't afford higher prices. See why we say a liberal will be stupid?

 

[eagle1462010]

Raw nerve hit.............................

Inversion is BS...........in articles I posted both the GOP and the Dems want to challenge it..............just in different ways........

I would rather see Corporate Taxes lowered.............To keep the jobs here.............I've said that before...........In the end the extra costs are passed on to the consumer anyway..............

But should they leave, and then send products back into the country shutting down jobs here as a result.............In shit hole 3rd World Countries with laughable wages.......................I'd TARIFF YOUR ASS on the way back in.........................

You can defend the IT'S CHEAPER..............The Americans losing their jobs to foreign countries and workers don't give a shit that some products are a little cheaper when they no longer have a job..................

It's fair trade...........no Free Trade........Nor allow a foreign entity to force us to change our laws.

 

[EdwardBaiamonte]

.....................

Inversion is BS..........

yes its tremendously stupid and liberal think that forces American companies to go off shore before they can invest money in America. 100% stupid and liberal!!

 

[EdwardBaiamonte]

.........In the end the extra costs are passed on to the consumer anyway..............

all costs are passed on to consumers anyway so tax cost should be 100% eliminated so business can concentrate on business, not tax dodging!!