Last month Zagg Inc, a Utah-based company that makes mobile device accessories, received more than US$9.4 million in cash from a US government ...
LONDON/BOSTON: Last month Zagg Inc, a Utah-based company that makes mobile device accessories, received more than US$9.4 million in cash from a US government program that has provided emergency loans to millions of businesses hit by the coronavirus.
The company's situation is one of several that reveal a previously unreported aspect of the government relief program: The fund is giving millions of dollars in American taxpayer money to a number of firms that have avoided paying US tax, a Reuters examination found.In all, Reuters' analysis of public data found around 110 publicly traded companies have each received US$4 million or more in emergency aid from the program.
There is no suggestion that loan recipients which channelled profits offshore have broken tax rules or the law, or that firms which have not paid US tax may not be eligible for aid. As Erik Gordon, professor at the University of Michigan's Ross School of Business told Reuters,"nobody has a duty to pay more taxes than the law itself requires."
For US Senate Democrat Sheldon Whitehouse, of Rhode Island, the fact that firms which channelled profits offshore could receive taxpayer bailouts highlights a need for reform. Reuters used the latest available financial information for around 420 publicly traded companies that have applied for the forgivable loans, which was collated by data provider FactSquared. It shows publicly traded companies have collectively received less than US$2 billion of the total.
For 2018, Zagg International Distribution paid around €4 million in royalties to Patriot Corp. That left the distribution firm with a profit of just €110,000. And Cayman-resident Patriot Corp's millions of dollars were liable for zero tax. The measure, enacted by Congress in 2017, is called Global Intangible Low-Tax Income - pronounced 'guilty' by tax experts. Six tax experts told Reuters that the fact a company has been hit with a GILTI charge is a clear indication of tax avoidance.
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