Big firms avoiding taxes
Microsoft Corp, Hewlett-Packard Co (HP) and other multinational corporations have avoided billions in US taxes by shifting profits offshore and taking advantage of weak, ambiguous sections of the tax code, US Senate investigators said on Thursday. Microsoft used “aggressive” transactions to shift assets to subsidiaries in Puerto Rico, Ireland and Singapore, in part to avoid taxes, the report by the Senate Permanent Subcommittee on Investigations said. In one example, the report said that the Washington state-based software giant saved US$4.5 billion in taxes from 2009 to last year by shifting assets to Puerto Rico. The report, released at a subcommittee hearing, also said that since at least 2008, HP has used complex offshore loan transactions worth billions of US dollars to avoid paying taxes, while using the money to run its US operations. The mammoth high-tech company has its headquarters in Palo Alto, California.
IMF to cut global growth
The IMF will lower its growth forecasts for the global economy next month, an IMF official said on Thursday. “The global economy has weakened. We are shaving off our forecast for global growth by a few decimal points,” Hoe Ee Khor, assistant director of the IMF’s Asia and Pacific Department, said in a conference call on South Korea’s economy. In its last estimates, the Washington-based global lender projected global growth of 3.5 percent this year and 3.9 percent next year. On Thursday, the IMF cut its growth estimate for South Korea to 3 percent, from a June forecast of 3.25 percent, citing the eurozone crisis and high household debt problems.
US jobless claims still high
The number of Americans filing new claims for jobless benefits held near two-month highs last week, suggesting some weakening in labor market conditions. Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 382,000, the US Department of Labor said on Thursday. The prior week’s figure was revised up to show 3,000 more applications than previously reported. Economists polled by Reuters had forecast claims falling to 375,000 last week. The four-week moving average for new claims, a better measure of labor market trends, rose 2,000 to 377,750 — the highest level since June. It was the fifth consecutive weekly increase in the measure.
Banks face capital shortfall
The world’s top banks need to step up efforts to raise cash or hold on to more profits after regulators estimated they would have had a shortfall of 374 billion euros (US$488 billion) had new capital rules been in place last year. Banks have in recent years been bolstering capital ahead of the new regime, designed to create a bigger safety net to protect taxpayers from having to bail out banks and avoid a repeat of the 2007 to 2009 financial crisis. The new rules will be phased in from January and be fully in place in 2019, but investors and regulators want banks to implement them early. The Basel Committee of global regulators said on Thursday that if the new rules, known as Basel III, had been in force at the end of December, the biggest banks would have needed 374.1 billion euros to hold core capital of 7 percent of assets, the target level banks will have to meet. That capital shortfall was down 111 billion euros from a previous assessment made in April.