American multinational companies repatriated a staggering $231 billion in corporate profits from Bermudian-based affiliates to the United States last year.

Changes in US tax law brought in last year slashed the rate of tax on profits brought back to the US from overseas.

A report by the US Commerce Department’s Bureau of Economic Analysis, released yesterday, showed that Bermuda was by far the largest source of repatriated profits.

The island had a near 30 per cent share of the $776.5 billion brought back to the US from around the world.

In 2004, when the US introduced a temporary tax holiday to encourage the return of offshore earnings, Bermuda’s share was 10.4 per cent, according to a report published in 2011 by the Greenling Institute.

The second-placed Netherlands contributed $138.8 billion more than $90 billion behind Bermuda’s tally.

Many US multinationals had kept their profits offshore, deterred from bringing them home by a 35 per cent tax rate. The 2017 Tax Cuts and Jobs Act, which took effect at the start of 2018, set a one-time 15.5 per cent tax rate on cash and 8 per cent on illiquid assets repatriated to the US.

Clearly, many took the bait as the Commerce Department report showed that last year’s repatriated profits were five times the 2017 total.

Chemical manufacturing companies brought home the largest amount, $209.1 billion, followed by firms in computers and electronic products manufacturing, $195.9 billion.

Several US multinationals have hit the headlines through their usage of Bermudian-based entities to cut their tax bills.

In 2017, Google’s parent company Alphabet moved $22.7 billion through its Bermudian subsidiary, which employs no one on the island.

Nike was also shown, through revelations in the Paradise Papers, to have used a Bermudian subsidiary to hold intellectual property that enabled the sports gear-maker to book billions in profits on the island.

The scale of the Bermuda “dividend” in the US report speaks to the popularity of the island as a domicile for subsidiaries that have little or nothing in the way of operations.

A quick search through the Bermuda Registrar of Companies list of incorporated companies finds subsidiaries of many more US household names.

Notably, about 280 Bermudian entities on the register bear the name of energy giant Chevron.

US banks including JP Morgan, Goldman Sachs, Wells Fargo and Citigroup also appear, as well as telecoms companies like Verizon, technology hardware manufacturers including Cisco Systems and Hewlett-Packard, beverage and packaged food-makers like Pepsico and General Mills and pharmaceutical companies including Pfizer and Bristol Myers Squibb.

Major economies want to see a global tax system that taxes more corporate profits in places where products and services are actually sold and where economic activity takes place, under the Organisation for Economic Co-operation and Development’s Beps (Base Erosion and Profit Shifting) initiative.

Country-by-country reporting and economic substance rules, which have been introduced in Bermuda and other offshore financial centres, are two examples of how the net is closing on tax avoidance by multinational companies.