Wednesday, March 14, 2007

Halliburton to move headquarters from Houston to Dubai.

SOURCES:

Finance 24: Halliburton Enrages Democrats

Washington Post: Halliburton Chief’s Move to Dubai Provokes Warnings on Hill

Oil services giant Halliburton—a corporation headed by U.S. Vice President Dick Cheney from 1995-2000—has announced plans to move its corporate headquarters from Houston, Texas to Dubai, in the United Arab Emirates. This move comes in the wake of heavy criticism of Halliburton’s acceptance of a no-bid contracts to provide service to the U.S. military in Iraq, and amid ongoing investigations of company practices, including overcharging. The announcement met with ire from Democratic Congressional leaders in Washington, D.C.—who now constitute the majority in Congress—promising hearings on this development.

Halliburton officials say the decision to move corporate headquarters to Dubai from Houston is motivated only by business judgment. They tout the fact that locating in Dubai will help the company in establishing a better position in the international energy market, which they claim is increasingly situated in the eastern hemisphere. However, U.S. lawmakers counter that the company, which has profited considerably from contracts with the U.S. government, is simply trying to avoid paying federal taxes and complying with U.S. laws banning financial dealings with particular countries, notably Iran.

Lawyers commenting on the issue asserted that because Halliburton plans to maintain its corporate status under U.S. laws, is publicly traded, and owned by U.S. investor, it will still have to comply with U.S. laws such as the Foreign Corrupt Practices Act. However, they add that as a foreign-based company, Halliburton will avoid having to pay U.S. taxes on income earned abroad, which could well be a considerable portion of the company’s multi-billion dollar revenues.

FOR DISCUSSION:

The United States has long-touted its corporate-friendly laws. Halliburton appears to have taken full advantage of the benefits they offer, much to the chagrin of some U.S. lawmakers.

Should the U.S. consider changing its laws to require foreign-based companies who choose to be legally incorporated in the U.S. to pay federal taxes on all their revenue? What might be the negative and positive implications of such a move?

1 comment:

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