As more companies become aware of the tax opportunity that Bermuda, the Cayman Islands and the British Virgin Islands offer, more are taking advantage of it. According to the I.R.S. in 2004, companies with foreign income said 8 percent of that income came from those remarkable islands. But in 2010, the figure was 11 percent. No further figures have been released from later years.
1.What is the loophole in FASB accounting standards that companies use to avoid disclosure about taxation? Is that expected to change soon?
2. On average, United States companies had profits of $873,611 per person living in Bermuda, the Cayman Islands, and the British Virgin Islands? Is this legal in the U.S.?
3. What is the current hot trend in corporate tax avoidance known as?
4. Why do you suppose that Northrop Grumman quit disclosing foreign profits on their books that they do not expect to pay taxes on?
Norris, F. (2014). The Islands Treasured by Offshore Tax Avoiders. The New York Times, June 5 (Retrievable online at http://mobile.nytimes.com/2014/06/06/business/the-islands-treasured-by-offshore-tax-avoiders.html?_r=2&referrer=)