GE의 지배구조와 국제조세전략

GE had disclosed low effective tax rates for about 20 years through active international tax strategies mostly driven by its strong corporate governance. GE’s corporate governance is characterized as widely distributed share ownership, independent board of directors and management compensation linked to enterprise value. Institutional investors as major shareholders, of which priority was stable earnings and dividends, incentivized GE management to pursue active tax planning through stock-based incentives. Along with the late 1990’s US tax revision allowing deferral of active financing income from overseas, GE deferred repatriation of earnings from low-tax rate countries, avoided US cash tax payments and increased net cash flow. Classifying such unremitted foreign income into permanently reinvested earning (PRE), GE lowered tax expense and maximized after-tax income in its financial reporting even under US world-wide taxation system. GE reported significant tax benefits amounting to several million dollars each year. The tax benefit from PRE reported in 2009 was $3 billions which accounted for approximately 27% of total net earnings. After the financial crisis, however, GE faced serious financial constraints due to plummeting credit rating and intensive financial regulatory supervision. It decided to exit from Capital business in 2015 and to repatriate foreign earnings, resulting in GE’s withdrawal from the international tax strategy. GE case would provide implications on the themes such as the relationship between corporate governance and tax avoidance, the impact of financial constraints to tax strategy, and the reputational risk from tax avoidance by supporting the preceding literatures on tax avoidance by multinational companies.