Tim Cook, CEO of Apple, testifies during a Senate Homeland Security and Governmental Affairs Subcommittee on Investigations titled 'Offshore Profit Shifting.
The biggest American firms keep trillions of dollars in profits overseas in order to avoid paying taxes to the US government, according to a new report by a public interest group.
Major companies like Apple and General Electric are parking nearly $1.2 trillion in profits offshore in tax havens such as Bermuda or Hong Kong, the report by US PIRG said.
Apple and General Electric held $108 billion and $82.6 billion, respectively, overseas in 2012, topping the list of companies with the most money kept offshore.
The report found that these companies would have owed more than $93 billion in additional federal taxes if they brought their earnings back home.
"When corporations use tax havens to dodge the taxes they owe, the rest of us pay the price, either through higher taxes, cuts to important programs, or a bigger deficit," said Dan Smith, US PIRG tax and budget advocate and the report's author.
Currently, US businesses can mostly avoid federal taxation on their overseas profit, as long as they don't bring the money back to the US. As a result, US companies have built up large stockpiles of cash offshore.
A similar report in June from the Citizens for Tax Justice found that at least 18 companies, including Nike, Microsoft and Apple, are stashing profits in offshore tax havens in a bid to avoid paying taxes.
In May, Tim Cook, Apple’s CEO came under harsh scrutiny by lawmakers over its tax practices.
During the hearing, Senate investigators accused Apple of not paying any corporate taxes on tens of billions of dollars in overseas income over the past four years.