"We are on the offense. Always."
That's the word from athletic apparel giant Nike in the letter to shareholders that opens the company's 2012 annual report.
That sentiment apparently goes beyond the products that Nike makes.
In the taxes section of Nike's annual report on its Form 10-K filing with the Securities and Exchange Commission, the company notes that "we have not recorded U.S. income tax expense for foreign earnings that we have determined to be indefinitely reinvested outside the U.S., thus reducing our overall income tax expense."
That a global company like Nike utilizes foreign entities to lower its U.S. tax bill is no surprise. A Government Accountability Office report issued in May found that profitable companies with more than $10 million in assets paid an average rate of 12.6 percent of their global profits in 2010, the latest data available.
The companies' tax rate inched up to nearly 17 percent when GAO took into account state and local taxes or the taxes the firms paid to foreign nations.
The current U.S. corporate tax rate is 35 percent.
But one area where you really have to give Nike special kudos for its tax-saving is in the naming of the foreign entities that it used to reduce its U.S. tax bill.
If the tax shelter fits…
Now I must admit that I'm neither a Nike shareholder nor a customer of its products. But some of the folks at Citizens for Tax Justice, a nonprofit public interest research and advocacy organization, are more knowledgeable about Nike brands.
And the Center's Tax Justice Blog says that Nike's tax subsidiaries are named after its shoes.
"Nike's long list of offshore subsidiaries includes 12 shell companies in Bermuda alone, 10 of which are named after one of Nike's own shoes," according to a recent post on the blog. The shoe-named foreign-based companies, according to the post, are Air Max Limited, Nike Cortez, Nike Flight, Nike Force, Nike Huarache, Nike Jump Ltd., Nike Lavadome, Nike Pegasus, Nike Tailwind and Nike Waffle.
Exhibit 21 in the Nike SEC filing lists two and a half pages of the company's foreign subsidiaries. If you're a Nike shoe fan, check it out and see if Citizens for Tax Justice missed any footwear names.
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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and a co-author of the e-book "Future Millionaires' Guidebook."