Goldman’s 10-Q raises questions about its transfer pricing (Ronald Fink)

Lawmaker claims bank is ‘hiding’ TARP money offshore

Goldman Sachs’ first-quarter earnings report has raised some eyebrows in Congress because of how effectively the bank used transfer pricing techniques to exploit low-tax jurisdictions abroad. As Bloomberg reported, Rep. Lloyd Doggett, a Texas Democrat who serves on the House Ways and Means Committee, complained Tuesday that Goldman seems to be “hiding offshore” amounts it received from U.S. taxpayers as part of the government’s efforts to bail out financial institutions.

Mr. Doggett suggested he might push for hearings, noting that steps by Goldman Sachs and other banks to shift income to countries with lower taxes is cause for concern.

Goldman noted in its 10-Q that it is subject to examination by the Internal Revenue Service and other taxing authorities in jurisdictions where the company has significant business operations (including the U.K., Japan, Hong Kong and Korea). It also indicated that the decrease in its effective tax rate from 34.1% to 1% for the quarter was primarily the result of “changes in its geographic earnings mix.”

But as one observer put it, that sort of disclosure makes for bad public relations.

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Read More: Financial Week