Companies stash profits generated overseas in order to avoid higher taxes at home, this is the common practice among corporates which focus on maximizing profits by one way or another. Here is the list of top S&P 500 companies that have the most cash reserves piled up in foreign countries.
Apple leads the list followed by Microsoft, Cisco Systems and Google parent company Alphabet Inc. Apple currently holds $252.3 billion in foreign cash reserves out of company’s total $285.1 billion. Microsoft holds $132.1 billion in foreign cash out of total $142.8 billion.
Cisco Systems hold $69.1 billion in foreign cash out of total cash held $71.6 billion. Comparatively, Alphabet holds less foreign cash out of its total cash, the company only holds $62.8 billion in foreign cash out of total $101.9 billion. Facebook comes at no. 12 in holding foreign cash assets; the social media giant only holds $15.9 billion in foreign reserves out of total cash $41.7 billion.
But the new law imposed by the U.S government in December could change the way the companies are currently managing their assets. According to the new law, U.S has dropped the corporate tax from 35 percent to 21percent, additionally 15.5 percent one-time tax on cash reserved outside the U.S.
According to the estimates, S&P 500 non-financials hold currently $1.2 trillion cash in foreign countries. The new law would be quite beneficial for the U.S economy as a whole, the companies at the first place wouldn’t require showing foreign earnings in order to get low tax rates in the home country because of the reduced corporate tax, secondly, to avoid 15% tax on foreign cash reserves the companies would prefer to hold the money within the U.S.