OFFSHORE Ingenious Tax avoidance Schemes used by Big Corporations that result in savings of up to 90% of taxes. How corporations like Starbucks, Mc Donalds, Apple, Amazon and many others, use tax havens and tax benefits of different countries of the world, to pay almost zero taxes, with ingenious schemes like the "Double Irish with a Dutch Sandwich" .... At least 55 of the largest corporations in America paid no federal corporate income taxes in 2020, despite enjoying substantial pretax profits in the United States. How to Avoid Taxes There are several ways that corporations avoid paying taxes, or manage to earn tax subsidies. 1. Foreign Subsidiaries Although the corporate tax rate has been reduced, companies are still using tax loopholes to save money. This includes finding ways to shift U.S. profits to foreign subsidiaries in countries with lower tax rates, a practice known as an offshore tax-shelter. The TCJA leaves open offshoring incentives for companies to save on taxes. Companies do not have to pay taxes on income earned abroad until that income is repatriated from abroad. That tax, however, can be deferred indefinitely if the income is held abroad indefinitely. This money held abroad can be borrowed against and even used to invest in assets in the U.S.4 2. Depreciation Another Fortune 500 and other major companies avoid taxes is with accelerated depreciation. The relative degree of freedom in tax laws has allowed companies to expense the cost of their capital at a faster pace than it actually wears out. This allows a company to declare less income and defer paying taxes until later years, and as long as the company continues to invest, the deferral of taxes can continue for an indefinite amount of time. 3. Stock Options Giving out stock options to employees as a part of their compensation is another avenue that has helped companies reduce their total tax bill. When the options are exercised, the difference between what employees pay for the stock and its market value can be claimed for a tax deduction. 4. Industry-Specific Options Finally, some industries such as research, oil and gas drilling, ethanol production, alternative energy, video game, and film production, are privileged by the federal tax code to receive certain tax breaks.

• published: 21 Jun 2021
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