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U.S. Companies Bring More Foreign Profit Home

The impetus for the latest uptick isn’t so clear. “It’s still a mystery,” said Anthony Carfang, a partner at Treasury Strategies Inc., a Chicago-based consulting firm. “There may be ways to use the money in the U.S. that’s going to get companies a higher rate of return.”

Even so, U.S. companies are still sitting on a record $2.1 trillion in foreign earnings, including about $690 billion in cash.

Some companies remain reluctant to move their money. The strong U.S. dollar eats into profits made in foreign currencies. And there are louder cries in Washington for a tax overhaul this year, encouraging some companies to wait and see what happens.

There’s little apparent reason “for companies to bring the money back right now,” said Mr. Carfang.

American companies pay taxes on their foreign profits in the countries where those profits are earned. But they don’t have to pay Uncle Sam as long as the money is “indefinitely reinvested” abroad.

Vipal Monga/CFO Journal

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