Relocating Business for Tax Reasons

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The IRS employs a worldwide tax system, meaning that regardless of where your business earns money, it has to be reported to the IRS. Thus, big American corporations that earn billions of dollars overseas pay taxes twice, at home and abroad. But the reverse is not true. Foreign companies operating in the US are not taxed twice on their foreign earnings. This makes American companies less competitive in the market.

For this reason many such US companies have relocated their operations to other countries where taxes are lower such as Panama, the Cayman Islands, Hong Kong, Ireland, Bermuda and Switzerland. One recent example is Greenfields Petroleum Corporation that used to be based in Delaware but has now moved to the Cayman Islands.

Greenfields Petroleum follows in the heels of bigger companies like Ingersoll-Rand, Transocean and Stanley Works (now known as Stanley Black and Decker).

Critics of companies that repatriate argue that the act is unpatriotic and blame so-called tax havens for attracting American companies. In support of double taxation, the government does allow a tax credit for American companies that pay taxes to foreign countries.

Please see full article below for more information.

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Published In: Business Organization Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Darrin Mish, Tampa Tax Attorney, The Law Offices of Darrin Mish, P.A. | Attorney Advertising

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