SEC Seeks Offshore Cash Disclosure

The US Securities and Exchange Commission is “pushing” companies to disclose to investors their offshore cash holdings, reports Helen Thomas for the Financial Times. Such disclosures could “be relevant and material to understanding a company’s liquidity,” Thomas adds. US regulations require companies to pay taxes of up to 35 percent on income earned overseas and repatriated to the US, providing an incentive to favor overseas over domestic investment. Tax law does not now currently regulate overseas cash holdings, and analysts suggest the discrepancy could distort business decisions. Most companies hold “substantially all” extra cash overseas; only a handful of firms provide specific disclosure. A specific revision would be likely only in the event of broad tax reform. The US is not alone in seeking domestic investment to jumpstart an ailing economy. Tax reform that increases global transparency in corporate cash holdings could help governments and investors anticipate and plan for cross-border industry mergers and takeovers. – YaleGlobal