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Interactive Map: Where do U.S. Multinational Corporations Report Foreign Taxable Income and Foreign Income Taxes Paid?

2 min readBy: Kyle Pomerleau, Tom VanAntwerp

We have created an interactive map which tracks U.S. multinational corporations’ reported foreign taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. able income, taxes paid, and average tax rateThe average tax rate is the total tax paid divided by taxable income. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. from 1992 to 2010 in over 90 countries using all available IRS data from Form 1118 .

Use the drop down options on the map to select country, year, and data category (i.e. foreign income, foreign taxes paid, and effective tax rates). Additional information below the map.

The United States’ “worldwide” system of corporate taxation requires multinational corporations to pay taxes twice, first to the foreign country in which they do business and then to the IRS after they repatriate their profits.

For example, if a subsidiary of a U.S. firm earns $100 in profits in England, it pays the British income tax rate of 21 percent (or $21) on those profits. Since our system gives companies a credit for the taxes they pay to other countries, the additional U.S. tax the firm is required to pay is equal to the difference between the U.S. rate of 35 percent and the British rate of 21 percent—$14. Between the two nations, the U.S. firm will have paid a total of 35 percent in taxes on those foreign profits once those profits are brought back to the United States.

In order to take advantage of the foreign tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. allowed under our tax system, companies are required to annually file Form 1118.

On Form 1118, corporations need to report how much they earn in each country in which they operate and how much they pay each country in taxes. We use this form to collect this data.

A few key points about the data:

  • Multinational corporations reported paying $128 billion in corporate taxes to foreign countries on $470 billion of taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. in 2010, according to most recent IRS data.
  • Over the past eighteen years, foreign corporate taxable income has grown by about 250 percent and foreign corporate taxes paid by 265 percent, while the effective tax rate has remained around 26 percent.
  • The effective tax rate on foreign income was 27.2 percent in 2010, prior to paying additional taxes to the United States.
  • More than 60 percent of all reported foreign taxable income was earned in Europe and Asia in 2010.

For more information on this map and foreign corporate income taxes see: “How Much Do U.S. Multinational Corporations Pay in Foreign Income Taxes?”

Note: This data includes only repatriated income and income subject to current taxation. Does not include income currently held abroad.