Corporate inversion
Corporate inversion is the term used to describe the process whereby a company moves its headquarters -- which may be nothing more than a post office box -- to a low-tax "enclave" such as Bermuda or the Cayman Islands while leaving its operations and employees in the United States.
Even though the U.S. Senate has twice passed legislation designed to prohibit the Department of Homeland Security from doing business with offshore corporations, the provision was removed both times by Republican leadership in the House of Representatives from the final legislation.[AP 5/16/03]
October 1, 2002: "According to the Department of the Treasury, the term inversion is used to describe a broad category of transactions through which a U.S.-based multinational company restructures its corporate group so that after the transaction the ultimate parent of the corporate group is a foreign corporation. Generally, after an inversion transaction, shareholders of the former U.S. parent company hold stock of the newly formed foreign parent, and the operations of the company are unchanged. Treasury also noted that there has been a marked increase recently in the frequency, size, and profile of inversion transactions."[1]
Four out of 100 federal corporations which "accounted for about $2.7 billion for contract obligations in fiscal year 2001, which is about 2.6 percent of the $102 billion in federal contract obligations awarded to the top 100 publicly traded corporations ... Three of the four corporations (McDermott International, Inc. [incorporated in Panama in 1983], Foster Wheeler Ltd. [incorporated in Bermuda in 2001], and Tyco International Ltd.) [incorporated in Bermuda in 1997] have engaged in transactions that have been characterized as inversions." The fourth corporation is Accenture Ltd., which was incorporated in Bermuda in 2001. McDermott alone received $1,885,243 thousand in FY2001.[2]
Other Related SourceWatch Resources
- Defense contractors
- federal contractors
- Homeland Security contractors
- Military-industrial complex
- Prison-industrial complex
- tax haven
External links
- CORPORATE INVERSION TRANSACTIONS: TAX POLICY IMPLICATIONS, OFFICE OF TAX POLICY, DEPARTMENT OF THE TREASURY, MAY 2002.
- Corporate Inversion: Don't Blame Companies. Fix Our Tax Code, freedom.gov, June 19, 2002.
- Patience Wait, U.S. companies with offshore HQs may be barred from fed contracts, Washington Technology, July 10, 2002.
- Letter: October 1, 2002, from the General Accounting Office to Rep. Henry A. Waxman, Ranking Minority Member, Committee on Government Reform, and Rep. Jim Turner, Ranking Minority Member, Subcommittee on Technology and Procurement Policy, Committee on Government Reform: Subject: "Information on Federal Contractors That Are Incorporated Offshore".
- Treasury to Require Information on Corporate Inversion, United States Mission to the European Union, November 13, 2002.
- Corporate Expatriation: Protecting American Jobs, Freedom and Prosperity, Updated April 10, 2003. *Comprehensive web site includes links to legislation, articles, and explanation of issues.
- Jonathan D. Salant, Offshore Cos. Make $1B in Deals With U.S., AP, May 26, 2003.
- Patrick McGeehan, Ingersoll Holders Support Return to U.S. From Tax Haven (of Bermuda), The New York Times, May 30, 2003.
