A loophole in the new U.S. tax law could allow multinational corporations like Apple Inc. to avoid paying billions of dollars in taxes on profits stashed overseas, experts tell Reuters.
Stemming from a Republican overhaul of international business taxes, the loophole involves the tax rates—15.5% or 8%—that companies must pay on $2.6 trillion in profits they are holding abroad.
By manipulating their foreign cash positions, a determining factor under the new law, a U.S. multinational could potentially save money by shifting profits to the lower rate from the higher one, according to Stephen Shay, a senior lecturer at Harvard Law School. The savings could amount to more than $4 billion in Apple’s case alone, he says.
“This is clearly the result of rushed legislation,” says Shay, formerly a top Treasury Department tax official.
