International Consultancy Firms Slammed For 'Unpatriotic' Tax Moves

by Mike Godfrey, Tax-News.com, Washington

29 May 2002

MSNBC's Newsweek has jumped on the New York Times' bandwagon, accusing US firms of acting in an 'unpatriotic' fashion by choosing to reincorporate offshore. However, there is one crucial difference.

Whilst NY Times columnist, David Cay Johnston has mainly taken aim at manufacturing companies such as Stanley Works and Coopers Industries, Newsweek's Wall Street Editor's target of choice is international consultancy firms such as PricewaterhouseCoopers and Accenture.

Writing as PwC's consulting arm splits from its auditing business, Allan Sloan suggests that: 'Getting big accounting firms to change their wilful ways is like trying to get teenagers to clean up their act in return for the keys to the family car. They'll promise anything but will revert to form at every opportunity.'

In the wake of several recent scandals involving 'Big Five' accounting firms which offer both auditing and consultancy services, PwC Consulting has split from its parent company, and will base its headquarters in Bermuda in order to minimize US taxes on foreign income, in a similar fashion to rival consulting firm, Accenture (formerly Andersen Consulting).

Despite the latter's protestations that as it was created only recently, it has never been a US corporation, and is therefore not acting unpatriotically, however, Mr Sloan has slammed the global consultancy firms for attempting to structure their tax affairs in an efficient way.

'If you believe in efficiency, you have to admire how the consulting industry gets three bites at the going-offshore apple,' he observed on Tuesday. 'First, it gets fees for helping American companies move offshore. Second, it gets paid for lobbying against congressional efforts to close this loophole. And third, it moves offshore itself.'

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