10 companies that park untaxed billions overseas

The US taxes companies that repatriate foreign profits. Here are the ones with the biggest hoards.

By Kim Peterson Apr 13, 2011 2:13PM
There are infuriating U.S. laws that tax overseas profit by 35% when companies bring that money back into the country. So naturally, companies leave that cash far away.

Fortune asked an accounting expert to find the companies with the most cash parked on foreign soil, and his top result should be no surprise: General Electric (GE). The company is awash in controversy these days for allegedly not paying any U.S. corporate income tax for 2010 (the company denies that but isn't saying what amount it did pay).

GE has a very aggressive tax team, led by a former Treasury official, and has spent decades trying to cut its tax bill. Fortune's accounting expert thinks the company has about $94 billion in untaxed foreign profit.

Post continues after this video about a proposal to give companies a tax break on bringing foreign profits home:
Here are the rest of the companies Fortune found with the biggest overseas balances:

2. Pfizer (PFE), with $48.2 billion in untaxed foreign profit. The drugmaker wants to bring that money back home, Fortune reports, and is asking the government for a temporary break so that it can invest more domestically.

3. Merck (MRK), with $40.4 billion in untaxed foreign profit. Merck already found a way to bring back $9 billion in international profits tax-free, Bloomberg reports. The money was used to help finance the company's merger with Schering-Plough, which involved a complex loan to some Dutch subsidiaries of Schering-Plough.

4. Johnson & Johnson (JNJ), with $37 billion in untaxed foreign profit.

5. Exxon Mobil (XOM), with $35 billion in untaxed foreign profit. The company does so much international business that more than 80% of its 2009 profit came from overseas, Fortune reports.

6. Citigroup (C), with $32.1 billion in untaxed foreign profit.

7. Cisco Systems (CSCO), with $31.6 billion in untaxed foreign profit. Cisco's chief executive, John Chambers, has been very vocal in his displeasure with the way the U.S. taxes foreign income. He has recently pushed for a tax holiday that would allow companies to bring profits back at only a 5.25% tax rate, Bloomberg reports.

8. IBM (IBM), with $31.1 billion in untaxed foreign profit.

9. Procter & Gamble (PG), with $30 billion in untaxed foreign profit.

10. Microsoft (MSFT), with $29.5 billion in untaxed foreign profit. (Microsoft owns and publishes MSN Money.)
Tags: ibm
23Comments
Apr 13, 2011 5:20PM
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I can understand the major companies investing their money in overseas banks....saving 35% in taxed income would make me do that too....what gives me a kick in the **** is Citigroup...the bank that needed a bailout from our federal government to the tune of billions of tax-payer dollars....now they have 32.1 billion dollars sitting in a UBS bank in Switzerland? Good God..if anyone should reinvest the money in American industry this company should....no justice or conscience here..!!!

 

Apr 13, 2011 5:04PM
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There is a moral  issue here that is escaping us - at a time when we are at war these companies are not sharing any of the burden that John Q Public is undertaking with taxed wages to fund our government obligations including the war effort.    Our troops depend on our support and we depend on them to keep us free.   These companies are shirking their responsibility to support such efforts - yet they are beneficiaries of our government efforts to try and keep the world a safe place.    It seems immoral that our troops are risking everything while these corporate leaders sit safely in their ivory tower and risk nothing.  

Apr 13, 2011 4:26PM
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i say tax them anyway, it's the only reason their not here, it's like money laundering. isn't it?
Apr 13, 2011 4:06PM
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Well, with all that money they need to collect from these shysters, they should be able to leave the little guy alone, NOT!!!
Apr 13, 2011 8:41PM
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BigBummer, I own off shore properties, foreign bonds, and foreign dividend stocks. I have to pay taxes on the profits. So, why shouldn’t the multi nationals be forced to do the same? It is part of being a US tax slave. No matter where I go on this planet to work my owner Uncle Sam wants a piece of everything I make. It is part of his ownership interest that was granted upon my birth on American soil. Any corporation that got its start in the US should also be a tax slave for life. Just like all the other US citizens. They have been granted all the rights as citizens by the Supreme Court they should have all the same obligations, too. TAX every single penny of profit foreign or domestic.

 

Oh, you can let them deduct the foreign taxes as an expense like I have to.  Double taxation! That should teach them to keep American manufacturing in America.

Apr 13, 2011 7:41PM
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NO wonder we are in debt the rich don’t get taxed while the Middle and lower pay the bills

Apr 13, 2011 7:29PM
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This money has already been taxed by the countries where it was earned.  The United States had NOTHING to do with these profits.  It would be the same as making someone who moved here from a foreign country hand over 35% of all their money for the privilege.  It makes ZERO sense.  It is just another government shakedown of corporations.  Of course they are gonna leave the money where it is to protect it.  God forbid they be allowed to bring it to the US to invest and do some good for our country.  The US always shoots itself in the foot, when it's not busy sticking it in its mouth!
Apr 14, 2011 1:29PM
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Here is a good idea set a minmum tax on all earnings for the businesses and individuals no one should be totally exempt from paying their fair share of taxes including the 50% that pay no taxes now.
Apr 13, 2011 7:45PM
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People don’t realize this or think about this but those companies that are not paying taxes are taking money away from us.  It takes it away from programs that benefit the people of the US that’s why we pay taxes.  They should be penalized and charged interest on those un-paid  bills

Apr 13, 2011 5:33PM
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$409 billion sitting offshore for the Top Ten. Cut them a deal: Bring the $ back at a reduce tax rate of say 20-25% and then they have to use half of the difference to hire new employees and they can keep the rest.

Round #'s they pay $100m in taxes vs. $143m @ the 35% rate. They keep $20m and spend $20m on jobs.

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No taxing profits earned abroad is a policy Congress.  These big corporations are taking advantage of this.  The logic is simple. Many countries, including Japan, give special tax subsidies to those that do businesses overseas. In order to facilitate competition, Congress passed this type of legislation.
If we want to change this fine, but blame these corporations of simply taking advantage of the tax code.  This is still, another powerful argument for income tax reform.

Peter R. Roach C.P.A, E.A.
May 31, 2012 10:46PM
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First off it sould be less taxed if they begain lowing ceo pay and redo the whole pay system so workers get there fair share of money. remove the whole stock market then just maybe people will learn it pays to work and do a good job at it.  then people would not mind so much when a company pay people what they are worth.
Jul 12, 2011 3:38PM
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The real issues are fairness and future behavior. 

1)Fairness: Many companies pay their foreign taxes to Uncle Sam.  It is totally unfair to offer some sort of "holiday" for those who opted to  not pay the tax.

2) Future behavior:  It seems obvious that allowing companies to repatriate the money tax free will just encourage those companies to do so again.  Even worse, it will encourage (all) other companies to do the same: Why pay the tax if you can leave it overseas until the tax free repatriation offer will be made again.

If the tax law is unreasonable, it should be changed, not circumvented.  Can anyone make the case that current tax law doesn't already favor those who have the resources to hire lobbyists?

Any one who doubts this need merely observe that the greatest increase in wealth (what, 80%?) in the last 10 years went to wealthiest (or highest income earners?) whereas for the middle and lower incomes have remained virtually flat.

Anyone who thinks a tax free repatriation is a good idea really needs to have their head examined.
Apr 13, 2011 5:36PM
Apr 14, 2011 11:34AM
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why develope here when you can do it elsewhere cheaper 

The theory is that the more consumers you have the better. The question becomes if you have a consumer without buying power are they still technically consumers. I guess we will see.

Apr 14, 2011 12:32PM
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Big Bummer's right, what you socialists don't understand is that these companies with foreign profits make and SELL goods overseas-their overseas businesses are NOT a case of taking jobs from the U.S. to manufacture goods overseas that are then shipped back to the U.S. to be sold.  Example: MacDonald's now has  @50% of income earned overseas-in fast food places all over the world, built overseas, staffed with foreign workers, buy supplies there, sell the fast food there, pay all the taxes there.  Why should they pay U.S. taxes on that same already taxed money to bring that money here?  If you morons sold your car to someone in the state next door and paid sales tax there, then had to pay sales tax on the same sale again in your home state, you'd be up in arms about double taxation. If you moved to another state do you think that state should then tax all the income you made and already paid state income taxes on in your previous home state? If your kid's in college in a different state and works part-time in that state, he or she pays state income taxes on those earnings in that state-should they ALSO pay state income taxes on that same income in their home state? Companies with foreign earnings are not taking money out of the U.S. and parking it in overseas tax shelters to avoid paying taxes, that money earned overseas in essence was earned by a different completely standalone company that operates wholly outside of the U.S.. Taxing that money again to bring it here would be like imposing tax on any foreign company or individual that wants to bring money here to invest in the U.S.-in addition to taxing the income earned from their investment. Money earned entirely overseas shouldn't be taxed again when brought into this country.  Think of all the jobs that would be created if trillions of investment dollars would be welcomed here. Maybe the fair solution would be for U.S. companies to sell or spin off all of their foreign subsidiaries like Phillip Morris did.  Then the foreign subsidiaries would be completely separate companies and the U.S. would never have any of their profits brought here, it would all be reinvested overseas.

I sense from many of these posts that the posters are members of the "gimmee, gimmee" group that thinks all those who actually work and pay taxes should give ALL their money to the government to handout even more to those lazy bums whose idea of work is popping out more fatherless children in order to increase their welfare/ssi/medicaid/childcare tax credits. The government should not be in the business of providing for all of its citizens wants and needs, it should be restricted to those activities in which we need to join together, such as national security. This country has been so successful because our founders limited government and empowered individuals to achieve.  Communism and socialism have failed.  Greece, Portugal, Spain are all in default on their debt from years of increasing taxes and wildly increasing entitlements and the # of government employees to the point that there just are too few people paying taxes left to pay for all of it. We are fast approaching that point. If we do not get the size of the government reduced and government spending cut, we will be unable to pay on our debt, then 1. no one will buy our debt and where will we get that >$1 TRILLION/year that we borrow, and 2. those who already own our debt will demand that we pay them a higher interest rate-which will balloon our debt even bigger-EASILY DOUBLE!  Think of your credit card interest jumping from 12% to 24% if you miss a payment. The same thing happens when a country misses a payment.

Apr 14, 2011 1:56AM
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HI,

 

While other countries do everything to help their companies  , the US government  has stupid policies  that  prevent jobs being created in the  US . well the US government spends like crazy on all those stupid wars, so called  aids to countries  that  dont work (like Pakistan etc )  and guess who pays for it through their nose, US citizens and their companies . All those money if allowed can bring in jobs and prosperity for many  and nurture  smaller companies in US.

Apr 14, 2011 9:17AM
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japan recently lowered their corporate tax rate, the highest in the land, now we have that honor, the u.s.of a has the highest corporate tax rate, 35%

 

you have a business here, that is what you pay, minus of course their writeoffs, chargebacks, etc, etc., but why would anyone in their right mind want to bring that money to the shores of the u.s. when they can develope overseas, this country is on the losing ways, we have shown it time and time again, and under obama, you can be assurd his goal is to bring this country down further, socialism 100% is around the corner

 

why develope here when you can do it elsewhere cheaper 

Apr 13, 2011 6:36PM
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Why isn't there a cost to taking advantage of these?
Apr 13, 2011 7:51PM
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By the idiotic logic being expressed by a number of posters, we should be taxing the incomes of all the foreign workers involved in making these companies their profits.  What is the difference? Hell, we should demand that ALL employees world wide pay taxes to the US.  It makes the same amount of sense.
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