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Johnson & Johnson To Repatriate $11 Billion Under AJCA Tax Break,
by Leroy Baker, Tax-News.com, New York 24 January 2005
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Pharmaceutical firm Johnson & Johnson has announced in a regulatory filing with the SEC that it will repatriate
$11 billion in earnings held overseas as a result of the one-year tax break under
the American Jobs Creation Act 2004.
The new legislation, passed by Congress in October of last year, ushered in a
series of new tax breaks in an attempt to stimulate domestic investment. One
of the most significant of these was a one-year ‘tax holiday’ for
US firms, allowing them to transfer earnings from foreign operations back to
the United States and pay income tax at 5.35% instead of 35%.
The repatriated funds must be used in job creation and domestic investment activities.
Analysts have estimated that around $518 billion in foreign earnings could qualify
for the tax break, although expert opinion is split on the measure’s likely
effectiveness in encouraging investment within the US.
Johnson & Johnson has a reported $14.8 billion in undistributed foreign
earnings.
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