Halliburton’s decision to relocate its chief executive office to Dubai will have no affect on the company’s tax exposure in the United States, according to tax experts.
Democratic Senators are making political capital out of demonising the decision of Halliburton’s CEO to move to the Middle East (
see related story
), but more level headed accountants point out that the company will still be domiciled in the US for tax purposes.
Halliburton Chairman and Chief Executive Dave Lesar will be moving to Dubai, but that does not mean that the entire company is being moved off shore.
As far as tax law is concerned, “moving the chairman’s office to Dubai is the same as moving it from the fourth to the 18th floor,” H. David Rosenbloom, director of the international tax program at New York University School of Law, told financial web site MarketWatch.
Aspiring politicians won’t let these cold facts stand in the way of a much better story, and are saber rattling in Washington.
A motion is expected to be filed on Capital Hill this week that will ask the White House to address no-bid government contracts for contractors who relocate overseas.
If Halliburton moved completely offshore, this move would prevent it from landing contracts in Iraq that are not put out to open tenders.
Halliburton might not benefit directly from a reduction in corporation tax, but its move to Dubai will certainly be good for its employees, and that might ultimately increase its bottom line – driving up tax liabilities when money is repatriated back into the States.
Dubai has no income tax, and a far more relaxed attitude towards the rights of employees than is found in the US.
Trade unions are banned in the country, and industrial action is rare and disorganised.
Companies throughout the Gulf often pay wildly different salaries for the same jobs depending on countries of origin, a practice that would be illegal in America.
Follow us on
