This reminds me of what Richard Rahn recently wrote in a column: > The specific problem of inversion stems from the fact that > the U.S. now has the fourth-highest corporate tax rate among the > industrialized countries and, unlike most other countries, the U.S. taxes > companies on their worldwide income. A company incorporated in America > will pay a corporate tax rate of 35 percent plus an average state > corporate tax rate of 5 percent for a total of 40 percent on its > worldwide income. A German, French, Canadian or even Swedish company > will pay a lower corporate tax rate on profits earned in their home > country, and little or no tax to its home government on any foreign > income. For instance, Ireland has a 12.5 percent corporate tax rate, > which means that the German, French or Canadian company only has to pay > 12.5 percent on their profits in Ireland, but the American company has to > pay 40 percent in tax on its profits in Ireland. The IRS does allow > credit for taxes paid to foreign governments so, in the case of a U.S. > company earning $100 of profit in Ireland, it would pay $12.50 in tax to > the Irish government, $22.50 to the U.S. government ($35 minus a $12.50 > credit for the tax paid to Ireland), plus perhaps $5.00 to the government > of the U.S. state in which it is incorporated, for a total of $40. > The high U.S. corporate tax rate and its worldwide > applicability puts American companies at a considerable competitive > disadvantage and makes them more vulnerable to takeover by a foreign > company. This is particularly true for U.S. companies with sizable > markets in lower-tax countries. Foreign-based companies with this tax > cost advantage will tend to grow faster and gain market share from > American competitors. To offset this competitive disadvantage a number > of U.S. companies decided to reincorporate in Bermuda, the Cayman > Islands, and other jurisdictions without any corporate income tax. Under > U.S. law, this is perfectly legal because a company need not sell or > produce anything in a country that serves as its legal home. -Declan --- Date: Tue, 17 Feb 2004 21:47:27 -0800 (PST) From: Joseph Lorenzo Hall <jhall@private> Reply-To: joehall@private To: Declan McCullagh <declan@private>, Dave Farber <dave@private> Subject: Isle of Man Government Launches Zero Tax for the Space Industry Administration Division Government Offices, Douglas, Isle of Man, British Isles. IM1 3PU Telephone: (01624) 685586 (01624) 685584 Fax: (01624) 685662 The Treasury Yn Tashtey Chief Financial Officer Mr M Shimmin, CPFA. Administrator : Miss K Corlett News Release Under strict embargo until 11.30 a.m. on Tuesday, 17th February, 2004 ISLE OF MAN LAUNCHES ZERO TAX FOR SPACE INDUSTRY THE Isle of Man is positioning itself as a centre serving 21st century technology by extending its zero rate of corporate income tax to businesses involved in the space and satellite industry. The move was announced by Island's Treasury Minister Allan Bell when he presented the Manx Government's annual budget today (Tuesday, February 17, 2004). The Isle of Man already has a zero tax regime for a number of industries - including shipping, insurance and fund management - and is moving to a standard zero rate for business in 2006. Said Mr Bell: "I intend to extend the existing zero-rate to new opportunities as and when they arise. A small but exceedingly promising area is Space and Satellite Technology. This will encompass the manufacture, operation, sale or other activities provided in respect of launch vehicles, satellites or similar assets, including those educational and other training activities that are directly associated with the industry. "A two-day course for representatives from the Island's business community and other interested parties will be given by the International Space University from Strasbourg at the International Business School in May 2004 and will provide an opportunity to impart detailed knowledge of the space industry and the business opportunities it affords the Island's economy. "Companies involved in this high value added category, will from 6 April 2004 be included in the growing number of activities that already benefit from the zero rate band of tax. I am extremely hopeful that high technology businesses will look to the Isle of Man as their preferred location, and know that the Treasury and the Department of Trade and Industry are working to further develop relations with several multi-national companies. One such company that provides a range of global communications services via its network of satellites has already established a base on the Island. Such developments fit perfectly within our economic plans and are made possible by the new taxation strategy." The Isle of Man is a Crown Dependency in the British Isles. The Island is one of the world's largest offshore banking, financial services, and insurance industry centres. It is also home to a growing commercial shipping register and a small but focused space and aerospace manufacturing industry. The Isle of Man is a member of the WTO, OECD, IMF, and holds special membership of the EU. This year the Isle of Man Government celebrates 1,025 years of uninterrupted continuous democratic home rule. Ends Media enquiries: Alistair Ramsay (44) 1624 686243 _______________________________________________ Politech mailing list Archived at http://www.politechbot.com/ Moderated by Declan McCullagh (http://www.mccullagh.org/)
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