10 companies with the most untaxed foreign income

1. General Electric

Untaxed foreign profit: $94 billion

Perhaps it's not surprising that General Electric, known for aggressively minimizing its tax bill, by far tops the list.The multinational conglomerate operates in nearly every corner of the world, whether it's supplying technology to hospitals in Malaysia, medical imaging equipment to England, or water systems in Ghana. It sells its products and services in more than 100 countries.A recent story in The New York Timesclaimed that GE paid nothing in federal income tax last year despite its $5.2 billion in domestic profits. It sparked a new debate over corporate tax reform, even though the company later told Fortune that it expects a small tax liability for 2010.

2. Pfizer

Untaxed foreign profit: $48.2 billion

The health care industry keeps more profits overseas than any other industry, according to Ciesielski. Pfizer, the world's largest drug maker, is among a number of large American companies pushing for a one-year tax holiday on foreign earnings. Along with companies like Apple, Cisco, and Duke Energy, Pfizer is lobbying for a temporary break on the regular corporate tax in order to repatriate its profits and invest more domestically.

Pfizer develops and markets a wide variety of prescription drugs and is best known for its blockbusters like Lipitor and Celebrex. It has grown mostly by acquiring other large pharma companies, including Warner-Lambert, Pharmacia, and Wyeth.

3. Merck

Untaxed foreign profit: $40.4 billion

Merck operates in more than 140 countries, delivering prescription medicines, vaccines, biologic therapies, and other pharmaceutical products to consumers and health care facilities around the globe.

While the pharmaceutical giant has kept large sums of its earnings overseas in order to avoid U.S. taxes, it has also found ways to bring some of it back without paying the full tax. According to Bloomberg, Merck brought more than $9 billion from abroad in 2008 without paying any U.S. tax to help finance its acquisition of Schering-Plough. Tax consultants have made a mint advising companies on loopholes to the repatriation tax over the years.

4. Johnson & Johnson
Untaxed foreign profit: $37 billion
The world's sixth-largest consumer health company has dozens of subsidiaries operating in 60 countries. J&J has had its troubles over the years, but it's still best known for some of the most common products found in any bathroom cabinet, from Tylenol to Neutrogena to Band-Aid. It also sells medical devices to hospitals and develops prescription drugs treating everything from cancer to infectious diseases.
Although it hasn't always been an easy ride for J&J shareholders, the company has rewarded them with 48 consecutive years of dividend increases.

5. Exxon Mobil
Untaxed foreign profit: $35 billion
Despite the economic downturn, Exxon Mobil invested a record $32.2 billion in energy projects in the U.S. and around the world in 2010. The oil giant anticipates global energy demand will increase by 35% by 2030 compared to 2005 levels -- which is why it plans to invest more than $125 billion over the next five years in new projects.
As with any oil conglomerate, Exxon does most of its business on international soil. More than 80% of the company's 2009 earnings came from outside the U.S.

6. Citigroup
 Untaxed foreign profit: $32.1 billion
Few banks are as global as Citigroup. The company has more than 200 million customer accounts and does business in more than 140 countries. It's the top credit card issuer in the Asia Pacific, it maintains a physical presence in 55 countries across Europe, the Middle East and Africa, and it operates nearly 2,600 retail bank branches and point of sales in Latin America.
Citigroup has faced more criticism than most multinationals over its U.S. tax rate ever since it received a $45 billion bailout from the government during the financial crisis. Since then, however, Citigroup has divested many businesses and announced plans to focus on its international footprint. Taxpayers, meanwhile, made a profit on the Citi bailout, even though they won't likely see much more from the company's tax returns.

7. Cisco Systems
Untaxed foreign profit: $31.6 billion
Cisco is leading the effort to convince Congress to pass a tax holiday for repatriated income. The company's CEO, John Chambers, co-authored an op-ed published in the Wall Street Journal arguing for it, and he recently told 60 Minutes that the company had nearly $40 billion overseas that would be brought back to the U.S. if the corporate tax rate were lower.
In fact, 50% of Cisco's sales are outside the U.S. and that's only going to grow -- IDC estimates that 71% of total information and communications technology spending will be outside the United States by 2014.


8. IBM
Untaxed foreign profit: $31.1 billion
The technology giant's expertise spans 17 industries across more than 170 countries. It's headquartered in Armonk, NY, but you can find its products and services in far-flung corners of the world, from Johannesburg to Tokyo.

Like many multinationals, IBM has capitalized in recent years on the fast pace of growth in large emerging markets, such as India, China, Brazil and Russia. And under CEO Sam Palmisano's leadership, international expansion -- especially into smaller emerging markets -- has been a priority. Palmisano spends his time traveling the world promoting IBM's "Smarter Planet" initiative, a program to use technology to address social problems such as access to health care or traffic congestion. The company was #12 on Fortune's World's Most Admired list this year.



9. Procter & Gamble
Untaxed foreign profit: $30 billion
From Tide detergent to Crest toothpaste, Procter & Gamble brands are a part of consumers' lives in 180 countries. Approximately 127,000 employees work in about 80 countries worldwide helping the company to expand in foreign markets, which account for 58% of its sales.

Last year, Fortune traveled to Chinawith P&G to find out how the company manages to sell $2 products in places where people earn $2 a day. "Our innovation strategy is not just diluting the top-tier product for the lower-end consumer," says Robert McDonald, P&G's CEO and chairman. "You have to discretely innovate for every one of those consumers on that economic curve, and if you don't do that, you'll fail."







10. Microsoft
Untaxed foreign profit: $29.5 billion
The world's largest software company has been criticized for taking advantage of tax loopholes in some of the markets where it operates. Microsoft shifted its income to Ireland, then the Netherlands, then to Bermuda -- tax strategies known as the Double Irish and the Dutch Sandwich, which are completely legal.

Like Apple, Microsoft is known for maintaining a war chest of cash on its balance sheet -- but many investors may not know that much of it won't ever be spent back in the U.S. As of the end of 2009, the company had $29.5 billion in earnings invested indefinitely offshore.







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