We had a server outage, and we're rebuilding the site. Some of the site features won't work. Thank you for your patience.
imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
Features
latest news
best of news
syndication
commentary


KILLRADIO

VozMob

ABCF LA

A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List

LAAMN List




IMC Network:

Original Cities

www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities

www.indymedia.org africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

U.S. Companies File in Bermuda to Slash Tax Bills

by DAVID CAY JOHNSTON for New York Times Tuesday, Feb. 19, 2002 at 11:31 AM
www.nytimes.com

in light of the whole enron thing...

error

U.S. Companies File in Bermuda to Slash Tax Bills

By DAVID CAY JOHNSTON

growing number of American companies,
encouraged by their financial advisers,
are incorporating in Bermuda to lower
their taxes sharply without giving up the benefits
of doing business in the United States.

Insurance companies led the way, but now
manufacturers and other kinds of companies are
following.

Stanley Works (news/quote), for 159 years a
Connecticut maker of hammers and wrenches,
is among the latest with plans to become a
corporation in Bermuda, where there is no
income tax. The company estimates that it will
cut its tax bill by $30 million a year, to about $80
million.

Tyco International (news/quote), a diversified
manufacturer with headquarters in Exeter, N.H.,
says that being a Bermuda corporation saved it
more than $400 million last year alone. Other
companies that have incorporated in Bermuda or
plan to do so include Global Crossing, a Beverly
Hills, Calif., telecommunications company; Ingersoll-Rand (news/quote) and Foster
Wheeler (news/quote), both New Jersey industrial manufacturers; Nabors Industries
(news/quote), a Texas company that is the nation's largest oil well services
company; and Cooper Industries (news/quote), a Houston manufacturer of industrial
equipment.

Becoming a Bermuda company is a paper transaction, as easy as securing a mail
drop there and paying some fees, while keeping the working headquarters back in
the United States.

Bermuda is charging Ingersoll- Rand just $27,653 a year for a move that allows the
company to avoid at least $40 million annually in American corporate income taxes.

The company is not required to conduct any meetings in Bermuda and will not even
have an office there, said its chief financial officer, David W. Devonshire.

"We just pay a service organization" to accept mail, he said.

Kate Barton, an Ernst & Young tax partner, said that incorporating in Bermuda "is a
megatrend we are seeing in the marketplace right now." Many corporations that are
planning the move have not yet announced it, she said.

In a Webcast to clients, Ms. Barton cited patriotism as the only potentially troubling
issue that corporations consider before moving to Bermuda, and she said that
profits trumped patriotism.

"Is it the right time to be migrating a corporation's headquarters to an offshore
location?" she asked. "And yet, that said, we are working through a lot of companies
who feel that it is, that just the improvement on earnings is powerful enough that
maybe the patriotism issue needs to take a back seat to that."

The White House has said nothing about these moves and their effect on tax
revenues. Mark A. Weinberger, chief of tax policy in the Treasury Department, said the
moves to Bermuda and other tax havens showed that the American tax system might
be driving companies to make such decisions. "We may need to rethink some of our
international tax rules that were written 30 years ago when our economy was very
different and that now may be impeding the ability of U.S. companies to compete
internationally."

But others have expressed concern about the trend. Senator Charles E. Grassley of
Iowa, the ranking Republican on the Senate Finance Committee, expressed alarm.
"There is no business reason for doing this, other than to escape U.S. taxation. I
believe the Finance Committee needs to investigate this activity."

There is no official estimate of how much the Bermuda moves are costing the
government in tax revenues, and the Bush administration is not trying to come up
with one.

A Bermuda address is being recommended by many legal, accounting and
investment advisers. Stanley Works, for example, relied on Ernst & Young for
accounting advice, Skadden Arps Slate Meagher & Flom for legal advice, and
Goldman, Sachs for investment advice.

Ingersoll-Rand's top tax officer, Gerald Swimmer, said all of the major investment
houses and accounting firms had presented the idea to his company.
Ingersoll-Rand expects its worldwide income taxes to fall to less than $115 million
from about $155 million annually.

Many companies looking for tax havens abroad are choosing Bermuda because it is
close, its political system is stable and it uses a legal system similar to that of the
United States. But some, like Seagate Technology (news/quote), the California
maker of computer disk drives, have gone to the Cayman Islands and other places.

Insurers have also flocked to Bermuda to escape most insurance regulations,
including how much money they must hold in reserve to pay claims.

Since companies that move to Bermuda usually keep their main offices in the United
States, they continue to have all the security provided by the American government,
the legal system and the courts.

But by moving to Bermuda, their income from outside the United States becomes
exempt from American taxes. Also, when the American company borrows from its
Bermuda parent, the interest it pays creates a deduction that reduces U.S. taxes, but
there is no tax on the interest earned by the Bermuda parent.

These companies say they are moving because their worldwide tax rates are higher
than those of foreign competitors. Stanley Works expects its worldwide tax rate to fall
to 23 percent to 25 percent of profits, down from 32 percent now, said Gerard J.
Gould, Stanley's vice president for investor relations.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy