Software Companies Find Tax Advantages in the Cloud

Expanding use of cloud computing to deliver software as a service can make it easier for global software companies to earn and keep its profits abroad, outside the reach of U.S. taxes.

VMware has cut its federal tax bill in the past three years because the company conducts the majority of its international business through Ireland. In the three-year period ending in 2011, the company’s tax bill fell despite its revenue rising 86 percent and its pretax profit more than tripling. In fiscal 2011, its U.S. tax rate was 4 percent.

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