Business group warns on offshore tax measures
A powerful business lobby is sounding the warning to lawmakers about a global effort to crack down on offshore tax evasion.
The National Association of Manufacturers warned the top congressional tax writers that the so-called Base Erosion and Profit Shifting project “could have a negative impact on the global competitiveness of companies in the United States and threaten the jobs of U.S. workers.”
NAM’s Dorothy Coleman noted that senior congressional Republicans have already sounded worried that the BEPS project, run by the Paris-based Organization for Economic Cooperation and Development, could be used by other countries simply to raise taxes on Americans.
“There could be significant effects on both U.S. businesses of all sizes operating outside the United States, as well as on U.S. tax reform efforts, resulting from implementation in other countries of the reporting requirements,” Coleman wrote.
The BEPS project is focused on rolling back multinational corporations’ ability to use sophisticated – and legal –strategies to lower their tax bill by routing their profits around the world.
The U.S. isn’t expected to implement the BEPS recommendations, which are expected by the end of the year. But business advocates fear that other governments, starved for more revenue, could use the recommendations to raise taxes on U.S.-based multinationals.
Coleman said in her letter that the manufacturers’ association was particularly worried about recommendations that would limit companies’ ability to deduct the interest on their debt.
“If adopted, this proposal would result in double taxation, raise the cost of capital and harm U.S. investment, making pro-growth tax reform harder to achieve,” she wrote.
