Tax Haven Companies Were More Likely to Have a Tax Cost Advantage in Federal Contracting

By General Accounting Office

Book Id: WPLBN0000028762
Format Type: PDF eBook
File Size: 0.4 MB
Reproduction Date: 2005

Title:	Tax Haven Companies Were More Likely to Have a Tax Cost Advantage in Federal Contracting
Author:	General Accounting Office
Volume:
Language:	English
Subject:	Government publications, Accountability in government, United States. General Accounting Office
Collections:	Government Library Collection, Government Accountability Integrity Reliability Office Collection
Historic Publication Date:
Publisher:	United States General Accounting Office (Gao)


Citation APA MLA Chicago Office, G. A. (n.d.). Tax Haven Companies Were More Likely to Have a Tax Cost Advantage in Federal Contracting. Retrieved from http://www.gutenberg.us/

Description
Government Accountability Integrity Reliability Office Collection

Excerpt
Excerpt: There are conditions under which a tax haven contractor may have a tax cost advantage (lower tax on additional income from a contract) when competing for a federal contract. The extent of the advantage depends on the relative tax liabilities of the tax haven contractor and its competitors. One way for a contractor to gain a tax cost advantage is by reducing its U.S. taxable income from other sources to less than zero and by using its losses to offset some or all of the additional income from a contract, resulting in less tax on the contract income. A company would thereby gain an advantage relative to those competitors with positive income from other sources and may be able to offer a lower price or cost for the contract. While some domestic corporations may also have a tax cost advantage, tax haven contractors may be better able to reduce U.S. taxable income to less than zero because of opportunities to shift income to their tax haven parents. Whether a contractor has a tax cost advantage in competing for a particular contract depends on the tax liabilities of other competitors. Also, the contractors with a tax cost advantage are not necessarily the successful competitors because the tax cost savings may not be reflected in actual prices, and prices may be only one of several factors involved in awarding contracts.