The semiconductor company Broadcom is moving its legal headquarters back to the United States from Singapore.
President Trump announced the move Thursday during a press conference in the Oval Office. It came just after he touted a new tax proposal from House Republicans.
Broadcom supplies chips and tech for smartphones, tablets, routers and other products. Although its operating headquarters are still in San Jose, California, the company reincorporated in Singapore two years ago for tax reasons, according to the Los Angeles Times.
CEO Hock Tan cited the Republican tax plan as a reason for the move back stateside. Among other changes, the plan would cut the corporate tax rate to 20% from 35%.
“America is once again the best place to lead a business with a global footprint,” Tan said.
However, he added that the company will move its headquarters regardless of whether the tax bill passes.
Matthew Gardner, a fellow at the Institute on Taxation and Economic Policy, pointed to several additional reasons Broadcom might want change its address.
Broadcom is in the middle of a $5.5 billion merger with Brocade, a networking company. That deal has been held up because of a review by the Committee on Foreign Investment in the United States, which evaluates sales of U.S. businesses to foreign entities to determine the impact on America’s national security.
Moving the legal headquarters back to the United States allows Broadcom to avoid CFIUS review, Gardner said.
Singapore will also soon lose some of its allure to Broadcom. Gardner said some tax breaks that Singapore extends to the company will end in 2021.
“So if tax breaks were what helped lure the company there to begin with, they are going to be wondering in a few years why they bothered moving to Singapore,” he said.
Another reason may be that Broadcom expects the Trump administration to follow through on Obama-era rules that crack down on corporate tax avoidance, including moving income offshore, Gardner said.
He said the Broadcom announcement boiled down to a dramatic promise that does not guarantee an economic benefit. And he said Broadcom’s “aggressive” way of chasing tax incentives presented its own cause for concern.
“It just begs the question of whether — if they are shifting their location once again for tax purposes, whether they’ll do it again in five years when the next Singapore offers new tax breaks,” he said.
