News 3 Investigation: The Offshore Tax Game - WSAV

     It is, without a doubt, Georgia’s most recognizable global brand. Coca-Cola’s classic logo and colors is a regular winner of the world‘s most identifiable logo.
     And Coca-Cola contributes countless jobs to the Georgia economy and more than 70,000 nationwide.
     But when it comes to corporate income taxes — Coke’s glass isn’t quite full.
     In recent years, Coke has bottled up some $30.6 dollars overseas — out of the reach of the American tax man — in thirteen different foreign shell corporations in eight countries from Singapore to Ireland to places you’ll need “Coke Bottle Glasses” to find on a map.
     Like the South Pacific Cook Islands, a British protectorate of just more than 10,000 people and an economy 75 times smaller than Savannah’s.
     What these countries have in common is not an insatiable thirst for an American classic…
     “Some of them have corporate income taxes that are just applied at relatively low rates. Others don’t have corporate income taxes at all,” said Matt Gardner of the Institute on Taxes and the Economy. “And some of these countries will tax certain types of profits, and not others.”  
    This money is just about impossible to characterize: how the money was made, where it was made, even when the money was made.
     Because Coke — and every other company with a foreign subsidiary — does not have to tell even the u-s government.
     “We don’t know for any of these corporations how much of it – if any – is being used for productive investments, and how much of it is just cash sitting there avoiding taxes,” Gardner said.
     In a statement, Coca-cola said they “pay all legally required income taxes,” though we never accused them of breaking the law.
     Only Home Depot (who has billions in sales in Mexico and Canada) and SunTrust Bank (who opened Cayman Islands accounts on customer requests) offered any additional description to us about their offshore holdings.
     Gulfstream parent General Dynamics has $1.7 billion parked in 15 offshore companies, including in Gibraltar and Bermuda.
     International Paper? $5.1 billion in 18 offshore subsidiaries including in Bermuda and four in Luxembourg.

     And on it goes — more than $45 billion, just in Fortune 500 companies based in Georgia, from the infamous Switzerland to the tiny island nation of Mauritius.
    So how much money have these companies shielded from American taxes?
    The IRS foreign tax formula — at least on paper — is pretty simple.

     You subtract the percentage taxes you paid in the foreign nation — say, 15-percent — from the 35 percent American corporate tax rate.
     That means if a company brought this money home to the United States, they would owe another 20 percent in taxes.
     So they just haven’t brought the money home for ten years, since the George W. Bush Administration offered a temporary amnesty.
     And it gets better: despite this simple foreign tax formula, these companies don’t have to tell us how much they owe.
     They can on their annual SEC 10-K filings or they can check a second box and simply say it’s “not practicable” for them to calculate.
     That’s right: a Fortune 500 company, with a tax scheme sophisticated enough to shield billions in assets in countries as far-flung as the Cook Islands, can simply tell the SEC it’s “not practicable” for them to estimate their tax burden on this offshore money.
     “We absolutely should not be allowing more than 200 fortune 500 companies to pretend they can’t figure this out,” Gardner said. “It’s ludicrous for these companies to say it’s beyond their capacity to measure how much tax their saving by keeping these profits abroad. They know.”

News 3 Investigation: The Offshore Tax Game - WSAV