Citigroup accused of tax avoidance
Company had an effective tax rate of -91.7%
According to a recent report by Oxfam America, US bank Citigroup had an effective tax rate of -91.7% between 2008 and 2014. They managed this by taking $2.6 trillion in federal loans, bailouts, loan guarantees and tax breaks even while the company made $9.3 billion in profits and squirrelled away nearly $44 billion offshore.
The report, ‘Broken at the Top’, looked at how America’s tax system enables large-scale corporate tax dodging, not just in the United States but in developing countries as well, fuelling “dangerous and growing levels of inequality” globally.
In its criticism, Oxfam America took aim at the way in which large companies use offshore tax havens and other aggressive and secretive methods to artificially reduce their corporation tax rates in both the United States and developing countries, while at the same time being the largest beneficiaries of taxpayer-funded support.
The report looked at the fifty largest US companies in the Forbes 2000 annual ranking to find out taxes paid, taxes avoided, federal support received and lobbying expenditures between 2008 and 2014. It found that:
- For every $1 paid in federal taxes, these companies received $27 in federal loans, loan guarantees and bailouts.
- For every $1 spent on lobbying, these companies received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
- Their effective tax rate was 26.5%, despite making $4 trillion in global profits.
- Only five companies paid the full 35% US corporate tax rate.
- Collectively these companies had 1,600 disclosed subsidiaries in tax havens, which were used to conceal $1.4 trillion.
Thousands of additional subsidiaries in tax havens may remain undisclosed due to weak reporting requirements by the Securities and Exchange Commission.
Citigroup appears in our guides to Current Accounts as the Citibank brand.
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