IBM New Zealand says it's too early to comment on the local impact of Big Blue's plans to repatriate US$9 billion (NZ$13 billion) from its overseas subsidiaries to the US.
In a statement to Computerworld, IBM NZ public relations manager Rachel Dahlberg says: "As yet we have no details of whether there will be any impact or changes for IBM in New Zealand."
IBM announced last week that its board has approved a plan to "repatriate" the US$9 billion in response to a one-off tax break enabled by the US Jobs Creation Act, passed last year.
The act seeks to boost domestic employment in the US and is offering, for one financial year, a tax rate of 5.25% on multinationals' offshore earnings that are repatriated to the US. Normally, repatriated profits would be taxed at the domestic US rate of 35%.
The tax break has spurred several US multinationals to repatriate large amounts of offshore earnings for the current financial year. However, questions have been raised in the US about to whether the incentive will actually help create jobs — Business Week magazine notes that the money can be invested not just in hiring staff, but also in capital investment, research and development, marketing, acquisitions, pension funding and debt repayment.
Hewlett-Packard has signalled that it may take advantage of the tax breaks to repatriate cash to the US, noting in a recent filing to the US Securities and Exchange Commission that "HP continues to evaluate whether it will repatriate foreign earnings under the repatriation provisions of the [Job Creation] Act".
In the filing, HP notes: "Up to US$14.5 billion is being considered for possible repatriation."
Business Week notes that HP is one of several US companies looking at repatriation who are actually shedding jobs at the moment. HP has announced plans to reduce its worldwide headcount by 14,500.