President Trump’s tax reforms have paved the way for some of America’s biggest companies to start moving the enormous piles of cash they have been storing overseas back into the country.

Firms like Cisco, which announced last week that it plans to repatriate around $67 billion in foreign profits during 2018, and Apple, which intends to bring back hundreds of billions of dollars, are taking advantage of Trump’s tax reforms, which have slashed the cost of paying tax on accumulated foreign income to just 15.5% for cash, payable over 8 years.

Last year, congress threw out old legislation that allowed firms to defer paying income tax on overseas profits until such a time as they repatriated the funds. The problem was, with the rate of tax set at an unappealing 35%, most firms elected not to bother to repatriate at all, instead choosing to accumulate vast cash reserves overseas.

Whilst Moody’s estimated that US firms were holding around $1.4 trillion in cash or assets overseas, Bloomberg has suggested a figure of $3.1 trillion has been stockpiled offshore.

Any company that decides to repatriate funds will now have to pay a rate of just 15.5% on cash, and an even lower 8% on less liquid assets, such as real estate. Many have been tempted to take the plunge, move their money back, and take a tax hit that represents a huge saving on what they would have paid under the old regime, which had been in place since 1986.

Apple, for example, expects to pay a tax bill of $38 billion when moving in excess of $200 billion back into the US, and Cisco will repatriate around $67 billion. Microsoft is rumoured to have quietly paid $13.8 billion in tax charges after repatriating funds.

The US government’s’ strategy is clear enough; to persuade their biggest companies to move their money back from overseas and start spending it in the US; creating new jobs for Americans, spending on infrastructure and boosting the domestic economy.

This certainly appears to have worked where Apple is concerned; the company has said that it intends to spend more than $30 billion in the US over the next five years, creating 20,000 new jobs and opening a new campus.

At the same time, however, Apple announced that it will be issuing stock based bonuses for $2,500, and this is where the controversy begins.

Cisco are adopting a similar policy, promising their shareholders a windfall of some $44 billion. In other words, they are using their repatriated funds to reward their shareholders, and not to invest in the US economy.

This could be a major problem for Trump and his government, and there has been a precedent. In 2004, the US government declared a “repatriation holiday”, offering companies a discounted rate for moving their offshore funds back into the country, on the understanding that the funds would be used for ‘permitted investments,’ which included hiring US workers, US investment, research and development.

What actually happened, was that firms re-allocated all of their planned spending on these areas to their overseas funds, meaning that no increase in domestic spending was recorded, and huge sums of money were lost in cut price tax breaks, sometimes as low as 6%.

Can it work this time? It is a bold move on Trump’s part; another aspect of the new tax laws is that companies will have less incentive to try to funnel their profits overseas to avoid paying tax on them, because now all profits, wherever they are made, will be subject to domestic tax.

As with all things tax related, the situation is complex and risky for all sides, but with some of America’s biggest companies taking the tax cut bait, the game of cat and mouse is very much on, and it will be fascinating to see who the ultimate beneficiaries are; American citizens, the government, the companies themselves, or their shareholders.