Friday, April 21, 2006
Interesting article in today's Wall Street Journal, Symantec Bucks $1 Billion Tax Bill Sought by IRS, by Antione Boessenkool:
The $1 billion tax bill that may be coming due for Symantec Corp. is largely the result of a widely used corporate maneuver that can shift profits overseas and shelter income from U.S. taxes. The security-software company owes the money as a result of licenses granted to foreign units, according to IRS audits that were disclosed by the company Monday in a SEC filing. Symantec, based in Cupertino, Calif., disputes the IRS conclusion, and said it will fight to overturn it.
Symantec and other companies grant licenses for a fee to foreign subsidiaries, and those licenses generate profits overseas. The Symantec dispute is over whether the company got fair value -- and paid taxes for that value -- on the licenses it granted. The disputed Symantec licenses involve Irish subsidiaries of Symantec and Veritas Software Corp., which was acquired by Symantec last year.
Ireland's favorable economic conditions, including a low corporate tax rate, make it a fairly standard place for U.S.-based multinational companies to do business....While the U.S. has a corporate tax rate of 35%, Ireland's corporate tax is 12.5%....
For the Form 8-K filed with the SEC, see here. For more media coverage, see: