Senate Hearing On Profit Shifting

On April 1, the Senate Permanent Subcommittee on Investigations held another hearing on multinational corporations that actively reduce their worldwide tax burdens by shifting profits out of the U.S. Senators and witnesses disagreed as to whether the specific transactions that U.S. corporate taxpayers use to move income to entities outside the U.S. (to other entities in their worldwide group) should be subject to scrutiny or praised. Some senators even questioned the propriety of the hearing itself.
 
Unlike prior similar hearings that focused on IT companies, this hearing focused on domestic manufacturing companies. In the typical transactions, companies restructured their foreign operations so that non-U.S. subsidiaries organized in low-tax jurisdictions would pay the domestic operating subsidiaries a small markup in exchange for providing all of the services and support required to perform certain foreign sales, resulting in a significant amount of the profits