NYT: Video-game companies take lucrative advantage of US tax code, especially EA
Posted by Joystiq Sep 11 2011 18:30 GMT in Ubisoft
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If the United States tax code were cheese, it would be more Swiss than American -- tax breaks and incentives for software development, research and technological advancement were established to promote an intellectual advantage in the US, and video-game companies are in a unique position to take full advantage of federal funding, especially EA, The New York Times reports.

EA boasts $1.2 billion in global profits over the past five years -- which is technically a net loss, after deferred revenue, executive-stock-option deductions and other accounting necessities, including a payout of $98 million, cash, in taxes worldwide. The US federal tax rate on any company is 35 percent, but that's before the creative accounting.

In 2004, EA hired Glen Kohl, formerly an employee of the Treasury Department under President Clinton, to make the most of its tax incentivies. Kohl has since lobbied for federal tax breaks on domestic production and established offshore subsidiaries in low-tax countries. EA now has 50 offshore subsidiaries in countries such as Bermuda, Singapore and Mauritius, and holds $1.3 billion in offshore funds that won't be taxed unless brought into the US.

EA spokesman Jeff Brown justified EA's monetary exportation as a consequence of running an international business:

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