Multinational IT companies are in conflict with the new Obama adminstration regarding a proposal to tax international profits more stringently than before, and they may end up footing new, increased tax bills.
IT companies in the US are up in arms about the proposal, which will reverse current legislation that lets firms defer the tax on foreign earnings, as long as the funds stay offshore.
The impact will be particularly severe on IT companies that have built up healthy international sales – many IT companies currently do more than half of their business outside of the US.
IT firms face the prospect of much higher tax bills if the legisation goes through. As an example, Google could have been liable for as much as $1-billion more in taxes last year.
IT lobbyists are pushing to have the proposal deferred or squashed.