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So, good news and bad news. The good news is, oil megacorporation ExxonMobil had such a profitable year in 2009, it contributed $15 billion to the world's tax coffers.
The bad news: Not a cent of that went to the IRS.
ExxonMobil, the world's second-largest company, says it actually paid out 47 percent of its profits in taxes, but not to the good ol' capitalist US of A. Says Forbes in a report on all the taxes of the US's top 25 firms (with added emphasis):
Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.
"What the financial statement says is that ExxonMobil, in 2009, after a handful of deferrals, recorded a total U.S. income tax benefit (i.e., a refund) of $46 million. Next to this, it shows total non-U.S. income taxes of $15.165 billion.
My mistake was in thinking that these figures somehow reflected actual tax benefits and liabilities. So what we should have written was that ExxonMobil “recorded†no U.S. income taxes for 2009 instead of “paid.†All you re-bloggers out there, please note the clarification. Mea culpa.
And for all you commenters outraged that Exxon isn’t paying taxes in the U.S., don’t worry, it is. Our article only focused on income taxes, but it’s worth noting that the 10-k also records $7.7 billion in other taxes in the U.S. (like sales taxes) and more than $50 billion of other taxes and duties paid (I mean recorded) overseas."
Global companies manage taxes globally so that they pay tax in the lowest cost jurisdiction (usually not the US)
So, they may set up a manufacturing plant in the Netherlands but all control is in Switzerland. This is known as Toll Manufacturing and means that any tax is subject to lower cost Swiss jurisdiction. To facilitate this they set up very complex company structures with multiple legal entities.
Another very large US corporation would move semi-finished goods around the world purely to minimize taxes. The could have done the whole thing in one plant but that would not have been tax efficient. They put more know how and ingenuity into designing this system/process than they did into creating some new products.
I'm upset that according to their own filings, not only did they pay zero taxes to the US, they claim that the IRS owes them $46 million.
Why does that upset you? Why do you care that they overpaid taxes?
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