What does Nike have to do with taxes? It turns out that Nike is very aggressive when it comes to sheltering profits overseas … Twelve of those subsidiaries are in Bermuda alone! The CTJ says that Nike has about $7 billion of profits parked offshore that are not being taxed by the United States or any other country … What is fun about this is that Nike apparently named its tax shelters after its shoes. According to the CTJ, 10 of the Bermuda subsidiaries are actually named after Nike shoes: Air Max Limited, Nike Cortez, Nike Flight, Nike Force, Nike Huarache, Nike Jump Ltd., Nike Lavadome, Nike Pegasus, Nike Tailwind, and Nike Waffle.I guess you can say that the Nike tax planners have some fun with their jobs. But I do have a couple of issues with how CTJ is spinning this. Counting the number of affiliates in tax havens is not a great way of measuring profit shifting. If they parked $7 billion in one Bermuda affiliate, it would have the same financial impact. Also – this $7 billion figure must be an accumulation over time. Nike generates around $3 billion in profits each year on $25 billion in sales. I checked their 10-K which shows a 25% effective tax rate in part because 52% of their income over the past three years stays in the U.S. And some of the rest goes to distribution affiliates in other high tax nations. Of Nike’s sales, 55% are to foreign customers. But given the profits attributable to Nike’s trademarks, I guess one could expect more of the income coming back to the U.S.
Thursday, July 31, 2014
Nike’s Bermuda Affiliates Are Named After Its Shoes
Forbes is also a fan of the good work of the Citizens for Tax Justice (CTJ) and note something a little odd: