Fifty biggest US companies stashing $1.3trn offshore

Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs all implicated in Oxfam report.

Hazel Sheffield in The Independent


Coca-Cola is among the companies named by Oxfam


The 50 biggest US companies have more money stashed offshore than the entire GDP of Spain, Mexico or Australia, collectively keeping about $1.3trn (£0.91trn) in territories where the money does not count towards US tax, according to a new report by Oxfam.

The revelations come after the European Commission announced plans to make big companies more transparent about where they pay tax. The charity said the Commission's proposals are “almost useless” for identifying where tax avoidance may be happening. It urged the UK Government to push for stronger rules to ensure that companies pay tax in all countries where they do business.

Robbie Silverman, Senior Tax Advisor at Oxfam, said that tax avoidance in the US will have a knock-on effect in countries around the world.

“The same tricks and tools used by multinational companies to dodge tax in the US are being used to cheat countries across the world out of their fair share of tax revenues, with devastating consequences,” he said.

“Poor countries are particularly hard hit, losing an estimated $100bn a year to corporate tax dodgers. This is enough to provide safe water and sanitation to more than 2.2 billion people,” he added.

In its investigation into the US tax system, Oxfam revealed some of the offshore accounting practices of the biggest companies in the US. Fifty companies including Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs keep a total of about $1.3trn in subsidiary companies registered all over the world, Oxfam says.

The Independent has contacted the companies named above for comment. Goldman Sachs declined to comment, the others did not respond.

The 50 companies are believed to have earned $4trn in profits globally from 2008-2014, but paid only 26.5 per cent of this in tax in the US, below the country’s statutory tax rate of 35 per cent. They rely on an opaque and secretive network of more than 1,600 disclosed subsidiaries in tax havens to stash about $1.3trn offshore, Oxfam said. It added that other offshore subsidiaries may be in use but under the radar of the Securities and Exchange Commission, because of weak reporting requirements.

These same 50 companies collectively received $27 in federal aid-like loans, loan guarantees and bailouts for every $1 they paid in federal taxes, amounting to a total of $11.2 trillion, Oxfam said.

Charities including Oxfam and Christian Aid have dismissed European Commission proposals to crack down on tax dodging as “close to pointless”. Christian Aid said new rules would allow “dodgy business as usual”.

Under EC proposals, companies would have to report profits and pay taxes in the EU and certain so-far undisclosed tax havens.While campaigners have lobbied for country-by-country reporting of taxes and profits, the proposed versions is so limited that it would not do the job, charities say.

“Unless companies have to report on their activities in all the countries where they operate, they could continue to dodge tax on a massive scale, using the places still hidden from view,” said Toby Quantrill, Chrisian Aid’s tax justice expert.

An protest by Oxfam outside the European Commission headquarters in Brussels earlier this week (Getty)

Campaigners have long asked for country-by-country reporting of tax affairs but the latest EC proposals are only a limited version of the rule. A previous tax haven blacklist put together by the European Commission in 2015 was withdrawn after it failed to include key countries like Luxembourg.

The latest European Commission proposals come in the wake of a huge data leak from a law firm in Panama that provided evidence of the true scale of offshore banking by the world’s super rich, including many current and former world leaders. Oxfam described the exploitation of tax loopholes as an “integral component” of the profit-making strategies of many multinational corporations.

Tax avoidance comes in many forms. Companies have reported up to $2 trillion of profits as “permanently reinvested” abroad, meaning it is not accountable for tax in the US. Some of the companies The Independent spoke to said that they still pay high taxes in the countries where the subsidiaries are registered. This practice can help them reduce their US tax bill because companies receive a dollar-for-dollar credit for any amount of tax they pay to other countries.

Oxfam, Christian Aid and Action Aid have said that in order to create a fairer tax system, companies must publically report revenues and taxes, publically declare any subsidiaries in tax havens and publically reveal how much money they spend on lobbying politicians.

Coke may need to carry a cancer warning

Drinks firm forced to change recipe in California after ingredient classed as health hazard

Rob Hastingsin The Independent

Saturday, 10 March 2012

Nightmares about the backlash they suffered the last time they dared to change the secret recipe for their drink still most likely haunt Coca-Cola executives.

But 27 years after the ill-fated launch of New Coke, the threat of having a cancer warning placed on their famous red bottles is forcing them to revise the closely guarded ingredients again.

With its arch rival Pepsi, Coca-Cola is altering its drink in the US after the state of California declared one of its flavourings a carcinogen – though it will continue to sell the old form of the drink in Britain and the rest of Europe, with no cautionary labelling.

The two drinks have been made to include less of the chemical 4-methylimidazole, a caramel flavouring known as 4-MEI, which the National Institute of Environmental Health Sciences in the US has linked it to cancer in mice and leukaemia in rats. It can be formed during the process of cooking certain ingredients and consequently may be found in minor amounts in many foods. Under Californian law, drinks containing a certain level of carcinogens must have a cancer-warning label on their packaging.

But the two companies – which, combined, make up 90 per cent of the soft-drink market in the US – insist the ingredient is not a health risk.

Coca-Cola said yesterday the cancer warning is: "scientifically unfounded", while also maintaining that the company has been able to make the changes through a "manufacturing process modification" rather than a full change of formula.

"The caramel colour in all of our products has been, is and always will be safe," a spokesperson said.
"The changes will not affect the colour or taste of Coca-Cola. Over the years, we have updated our manufacturing processes from time to time, but never altered our secret formula. Caramel is a perfectly safe ingredient and this has been recognised by all European food-safety authorities.

"The European Food Safety Authority (EFSA) reaffirmed the safety of caramel colouring as recently as March 2011 and stated that the presence of 4-MEI in caramel colouring is not a health concern. In fact, 4-MEI is found in many foods including baked goods, coffee, bread, molasses, soy sauce, gravies and some beers."

The American Beverage Association, the drinks industry's trade body in the US, also said that there is no evidence that the ingredient poses a risk to humans. And the US Food and Drug Administration said someone would have to drink 1,000 cans of Pepsi or Coke per day to ingest the same dosage of the chemical given to the laboratory mice.

The secret recipe: 'Merchandise 7X'

Is a great deal of self-propagated myth surrounding the Coca-Cola recipe and its "Merchandise 7X" combination of flavourings, which is apparently privy to just two executives who are not allowed to fly in the same plane in case the secret goes down with them. Last year an American radio presenter tracked down a 1979 article in an Atlanta newspaper which revealed nutmeg, neroli and even coriander were ingredients.

The original recipe from 1886 has been changed several times. Cocaine was replaced by caffeine in 1904. But the most controversial change was in 1985, when the company introduced New Coke with a sweeter taste. The product bombed, lasting just three months before the original was reinstated.

Liam O'Brien