McKenna Writes For Accountancy On Offshore Profit Shifting By Multinationals

Last December I wrote an article for UK publication Accountancy on the habit of US multinationals shifting profits to lower tax jurisdictions, thereby avoiding tax in the US and other high tax jurisdictions like the UK.

Here’s the lede for “Shifting”.

Multinationals headquartered in the US often reduce income taxes by shifting profits offshore. Profit shifting erodes the corporate tax base and reduces overall tax revenues. Lower revenues are squeezing governments all over the world trying to provide services during a prolonged period of economic uncertainty and high sovereign debt. There are now significant differences in the tax burden among corporate taxpayers and an overall unequal burden on all taxpayers in the US and in the UK.

US corporations with activities in relatively high tax UK avoid tax on profits by moving income to tax havens. Loopholes in the US tax code allow corporations to do this with impunity. Governments continue to prioritise a ‘competitive tax environment for business’ in the hope corporations will convert profits into economic growth and jobs. Tax justice and a fair spread of the deficit reduction burden have been ignored.

A .pdf of the article is here.

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