What are foreign tax shelters?
Tax shelters exist in countries with corporate tax rates much lower than those of the U.S., which make them popular for U.S. businesses looking to lower their tax bills. The U.S. corporate tax rate is 35 percent. Iceland’s is 15 percent and Switzerland’s is just 8.5 percent. Many countries in the Caribbean don’t tax corporations at all. Q: How do companies use tax shelters to save money? A: One of the most popular tactics involves setting up multiple overseas subsidiaries to move profits from high-tax countries to low-tax countries. Q: What happens to money stored in tax havens? A: In most cases it stays there. Companies can avoid paying taxes on overseas profits indefinitely, as long as they don’t bring the money back to the U.S. Q: How widespread is the use of tax shelters? A: A January report by congressional investigators found that 83 of the 100 largest publicly traded companies in the U.S. operate subsidiaries in tax havens, such as the British Virgin Islands and Bermuda, where t
