Elon Musk’s Tesla will pay exactly $0 in federal tax this year despite making a record profit of $5.5 billion in 2021. According to the company, it lost money in the U.S. and derived all of its profits from overseas profits, leaving it with no federal tax and just $9 million due in state taxes.
Observer reports that according to an annual report filed with the SEC on February 7, electric car maker Tesla has revealed that it will pay $0 in federal tax this year despite record profits of $5.5 billion for the year. In a note section on page 86 of the report, the company stated that it recorded a loss of $130 million in the U.S. in 2021 and that all of its pre-tax net income came from overseas operations.
This means that Tesla expects to pay $0 in federal corporate income tax and $9 million in state tax. The state tax is based on Texas’ state tax rate, Tesla relocated to Texas from California in December 2021. Tesla noted that it will pay $699 million in income tax related to foreign profit, which is taxed at roughly 11 percent, well below the 21 percent federal corporate tax rate in the United States.
45 percent of Tesla’s global revenue in 2021 came from U.S. sales, yet the company claims to not have generated any domestic profit. Observer notes that there could be a few explanations for this. One is that Tesla is structuring its global operations in a way that means income is reported from entities in overseas subsidiaries registered in tax havens like Bermuda and Ireland, while U.S. operations have little taxable income to report.
This practice is common amongst American multinational corporations, according to tax experts. Martin Sullivan, the chief economist for Tax Analysts, told CNN: “It’s very common. It’s almost malpractice not to do that. That defies common sense, but it does not defy the U.S. tax code.”
Another possible explanation for Tesla paying $0 in income tax is that the company might actually be losing money in its American operaitons. Tesla has lost money for a decade until it turned its first quarterly profit in 2019, the same year it opened its Gigafactory in Shanghai, China. Gordon Johnson, the CEO of the equity research firm GLJ Research, stated that he believes that Tesla was only able to turn a profit after it began making cars in China due to lower production costs.
Read more at Observer here.
5 thoughts on “Tesla to Pay $0 in Federal Tax Despite Record $5.5 Billion Profit in 2021”
They don’t owe it anyway just like most Americans don’t owe it either. Complete SCAM it ALL is!
I say the rest of us follow the example
Stop paying these fcks to subjugate you
I couldn’t agree more
I am amazed Musk found enough people to buy his junk for 5.5 billion in sales, let alone profits.