Sixty-three of the 100 largest publicly traded U.S. federal contractors have subsidiaries in tax havens, according to a new Government Accountability Office report.
A tax haven is a country with no or low taxes where companies set up subsidiaries in order to reduce their tax burdens to the United States. Many of the tax havens cited in the GAO report are Caribbean countries, such as Barbados, the Bahamas and the Cayman Islands.
Four contractorsÂ had more than half of their foreign subsidiaries in jurisdiction listed as tax havens. One contractor, Proctor and Gamble, has 83 off-shore subsidiaries in tax haven countries.
Among the big name contractors with one or more tax-haven subsidiaries:
- Boeing, the governmentâ€™s second largest contractor, which has 38 off-shore subsidiaries in eight different tax havens.
- General Dynamics, the fourth largest contractor, which has five subsidiaries in three different tax havens.
- L-3 Communications, the sixth largest contractor, which has 15 subsidiaries in eight different tax havens.
- United Technologies, the seventh largest contractor, which has 12 subsidiaries in five different tax havens.
- McKesson Corp, the ninth largest contractor, which has one subsidiary in a tax haven.
- Computer Sciences Corporation, the 10th largest contractor, with has 21 subsidiaries in nine tax havens.
The governmentâ€™s largest contractor, Lockheed Martin, has no off-shore subsidiaries at all. Northrop Grumman, the third largest contractor, and Raytheon, the fifth largest contractor, are also free of foreign subsidiaries. KBR, the eighth largest contractor, has five foreign subsidiaries, but none are located in tax havens, according to the report.
For a complete listing of contractors, check out Appendix 3 of the report.
The report has one caveat:
The existence of a subsidiary in a jurisdiction listed as a tax haven for financial privacy jurisdiction does not signify that a corporation or contractor established that subsidiary for the purpose of reducing its tax burden. We did not attempt to determine if corporations or contractors engaged in transactions with their subsidiaries in order to reduce their tax burden.