Foreign ownership of U.S. companies jumps

CHICAGO Wed Aug 27, 2008 3:23pm EDT

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CHICAGO (Reuters) - Foreign ownership of U.S. companies more than doubled from 1996 to 2005 measured by revenue and more than tripled as measured by assets, according to an analysis of U.S. tax data released on Wednesday.

The analysis of Internal Revenue Service (IRS) data from Grant Thornton LLP, the U.S. member firm of audit, tax and consulting organization Grant Thornton International Ltd, showed total receipts at "foreign-controlled domestic corporations" rose 13 percent to $3.5 trillion in 2005 from $3.1 trillion in 2004.

The total receipts of foreign-owned companies were $1.7 trillion in 1996 and just $39 billion in 1971.

Grant Thornton said 2005 is the most recent year for which the IRS has such data available.

More recently, the weak U.S. dollar and slumping stock prices have provided bargain basement opportunities for foreign buyers, leading to a rash of deals, including the sale of venerated American icons such as storied brewer Anheuser-Busch Companies Inc and the landmark Chrysler Building in New York.

According to the Grant Thornton report, total assets at foreign-owned companies increased 15 percent to $9.2 trillion in 2005 from $8.0 trillion a year earlier and was more than three times the 1996 total of $3 trillion. Foreign-owned assets totaled just $37 billion in 1971.

The share of foreign-owned U.S. companies as a percentage of the whole has also jumped to 13.9 percent. Back in 1971, foreign companies owned 1.3 percent of all corporate U.S. assets.

In 2005, 20.5 percent of qualifying dividends from these foreign-owned were repatriated to the United Kingdom, 16.2 percent to Japan, 12.7 percent to Germany and 12.3 percent to the Netherlands.

Grant Thornton said the rise in foreign ownership has come despite a high combined U.S. state and federal tax rate of almost 40 percent, the second highest after Japan among the member countries of the Organization for Economic Co-operation and Development.

"Despite the high corporate tax rates, many foreign multinationals recognize the importance of the U.S. market from a global standpoint," said Joseph Calianno, a partner in Grant Thornton LLP's National Tax Office.

After tax credits, foreign-owned companies paid income tax of $42.4 billion in 2005 on taxable income of $153 billion, Grant Thornton said.

(Reporting by Nick Carey; Editing by Andre Grenon)

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