Arab Today, arab today behind big us deals in europe avoiding taxes
Last Updated : GMT 15:35:53
Arab Today, arab today
Arab Today, arab today

Behind big US deals in Europe: Avoiding taxes

Arab Today, arab today

Arab Today, arab today Behind big US deals in Europe: Avoiding taxes

Washington - AFP

General Electric wants to buy France's Alstom; Pfizer is chasing Britain's AstraZeneca -- US companies are looking hungrily at European rivals. But the reason is not just to grow. The American giants, at least in part, are looking to avoid potentially large tax bills back home. US companies have accumulated massive piles of profits offshore, but do not want to bring the money home because of the 35 percent chunk they will have to pay the government to do so. So instead of paying out the profits to shareholders, or making US investments, they are spending the money offshore. The large deals announced this week are fueled by these offshore cash piles. General Electric wants to spend possibly $14 billion to buy the French company's power generation unit, which complements its own. Pfizer has made one of the largest buyout offers ever: $100 billion for the British drugmaker AstraZeneca. "The tax was a significant factor in making them look for acquisitions outside the US," said Robert Pozen, the former chairman of MFS Investment Management. The United States is among a handful of countries that taxes companies on all their earnings, whether made inside or outside the country. And the 35 percent rate is one of the highest in the world. But the tax only hits the offshore earnings when they are repatriated. That is a key reason why US companies hold a total of $2 trillion offshore, according to Audit Analytics data. And with lower tax rates, Europe becomes an inviting destination to spend it. Ian Read, Pfizer's chief executive, himself admitted that taxation was an important issue in the AstraZeneca offer, so far rebuffed by the British company. The US tax rate is "uncompetitive," he said, adding that a combined Pfizer-AstraZeneca would have its corporate domicile -- where it is taxed -- in Britain and operating headquarters in the United States. GE, which has a $57 billion war chest offshore, would not provide any details on the reasons for its Alstom bid. But there is the potential for many more deals. Apple keeps $54 billion offshore. It has not made any big buys outside of the country, and some shareholders have been clamoring for it to divvy the money out to them. The company has recently come around to distributing some, but instead of bringing the money back and see it taxed, it is borrowing cash to pay out to investors. -- 'The worst system in the world' -- Analysts say the tax issue cannot be the only motivation behind the proposed European acquisitions. "The (tax) incentive is probably less than it might seem," said Chris William Sanchirico, co-director of the Center for Tax Law and Policy at the University of Pennsylvania Law School. The tax issue "makes a deal that would be kind of so-so under normal circumstances better," said University of Michigan professor James Hines. "But it doesn't turn a loser into a winner." Experts agree that US tax rules doubly penalize the country: it does not get any income from the profits, and it does not benefit from their being invested or distributed inside the country. "They can't use that money to buy US companies, they can't use it to build facilities in the US, they can't use this money to pay dividends to their shareholders," said Pozen. "It's a very serious problem because this money isn't helping economic growth in the US." Victor Fleischer, a tax law specialist at the University of San Diego, was more direct: "It's the worst system in the world," he said. Politicians agree that the US tax code needs reform, but disagree on how to make the changes. In late November, Democrats proposed a sweeping reform that would lower the tax rate while banning the holding of profits offshore. But Republicans have opposed all the reforms proposed by their rivals, especially ahead of what promises to be a toughly fought congressional election in November. The worry is that companies will increasingly seek to reduce their US tax bill -- and deny the US government needed funds -- by using accounting measures to push even more income abroad, said Matt Gardner, executive director of the Institute on Taxation and Economic Policy. "Our concern is that the next step is that they will even shift their US profits on paper offshore," he said.  

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today behind big us deals in europe avoiding taxes Arab Today, arab today behind big us deals in europe avoiding taxes

 



Arab Today, arab today
Arab Today, arab today Fadi explains secrets of  Nancy Ajram's newlook

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Tourist guide explains types of tourism

GMT 18:28 2017 Saturday ,25 February

Tourist guide explains types of tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars

GMT 14:44 2017 Saturday ,25 February

China overtakes US as Germany’s top trade partner

GMT 05:53 2017 Saturday ,25 February

Global sovereign debt to hit new all-time high

GMT 05:17 2017 Saturday ,25 February

Oil world cautious on Trump’s next move

GMT 09:59 2017 Friday ,24 February

Baidu revenue slips anew amid ad clampdown

GMT 05:20 2017 Thursday ,23 February

WTO ratifies first multilateral trade deal
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Ola Ghanem hopes to work with M.Ramadan

GMT 07:23 2017 Friday ,24 February

Ola Ghanem hopes to work with M.Ramadan
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday