Oracle benefits from US tax break at heart of EU row

MyCustomer.com
Share this content

Oracle has been named as one of the biggest beneficiaries of a corporate tax break that threatens a major dispute between the US and the European Union.

A study released last year by the US General Accounting Office found that Oracle was among the tax break's top 20 beneficiaries. The GAO had studied 300 firms who reported using the tax break in federal filings.

In common with companies such as Cisco and Applied Materials, Oracle saved millions of dollars using the tax break which was put in place by the US Congress to improve US companies prospects of competing overseas. Oracle has benefited most to the tune of $158.2 million between 1991 and 2000.

The tax break essentially allows American firms to shield some of their overseas sales from taxes by channeling exports through a foreign subsidiary. Critics say that those subsidiaries often have been little more than paper fronts, not real operations, although clearly the Oracle European operations do not fall in this category.

The European Union sees the break as an unfair subsidy and today plans to release a list of US exports it will target to hit back. The EU is authorised by the World Trade Organisation to penalise US products and services up to $4 billion if it chooses. The Bush administration has already signaled that it intends to replace the current tax break with other changes that would benefit exporters.

Despite the break being in place to improve prospects for US firms abroad, Oracle UK was last week at the centre of the latest round of cuts at the company when 8 per cent of its headcount was axed.

About mycustomer.newsdesk

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.