Tax-Writers Take On BEPS, Tax Extenders

Legislative Activity

Tax-Writers Begin to Focus on BEPS, Tax Extenders Still Remain

Though international tax reform negotiations may have fallen apart for 2015, tax-writers this week will hold their first hearings to address efforts by the Organisation for Economic Co-operation and Development (OECD) to counter corporate tax avoidance as part of more than two years of work on the Base Erosion and Profit Shifting (BEPS) Project. The final BEPS proposals, which were released in October, were endorsed by G20 leaders earlier this month during their summit in Antalya, Turkey. Given the potential impact these proposals will have on the U.S. tax base, the OECD BEPS Project has been – and will continue to be – an important piece of the international tax reform debate in Congress.

Notably, as part of these first hearings on the BEPS Project, lawmakers will likely address the topic of tax inversions, which continues to be an issue for the U.S. economy. To address the issue, the U.S. Treasury recently issued additional guidance expanding on and clarifying its September 2014 actions against inversions with the hope of making it less attractive for U.S. multinationals to successfully complete inversion transactions. Nevertheless, barring congressional action, it is unlikely that the Administration alone will be able to fully stop inversions.

Separately, another key issue remains to be addressed by tax-writers before Congress adjourns: tax extenders. While it appears the lawmakers are making strides toward a package that would make several tax extenders permanent (much like the Reid-Camp deal would have), achieving such a compromise remains challenging and may well result in a one-year retroactive extension of expired tax extenders, potentially forcing lawmakers to address the issue again next year.

This Week’s Hearings:

• Tuesday, December 1: The House Ways and Means Subcommittee on Tax Policy will hold a hearing titled “OECD BEPS Project.”
• Tuesday, December 1: The Senate Finance Committee will hold a hearing titled “International Tax: OECD BEPS and EU State Aid.”