NAM Raises Concerns Over BEPS Requirements to Senate Finance Committee

Today, the Senate Finance Committee met to discuss the Organization for Economic Co-operation and Development’s (OECD) project on Base Erosion and Profit Shifting (BEPS), a set of proposals on international tax policy approved earlier this fall that will place U.S. companies at a competitive disadvantage globally. Testifying with me today was Robert Stack, Deputy Assistant Secretary for International Tax Affairs at the Treasury Department, and Michael Danilack, Principal at PricewaterhouseCoopers.

During the hearing, the NAM laid out to a bipartisan group of U.S. senators our concerns over the “master file” provision – a new BEPS proposal on information sharing and disclosure. Manufacturers are concerned that the master file requirement could force them to disclose an unprecedented amount of proprietary business information about their company to foreign governments. Under the provision, manufacturers would be forced to turn over a comprehensive business road map, detailing every aspect of a company’s worldwide operations to foreign tax authorities with no clear protections in place.

Moreover, this information could be requested by any country where a company is doing business and, unlike other BEPS reporting proposals, the master file is not protected by any confidentiality, consistency or appropriate use conditions.

For manufacturers, the master file represents an unacceptable and unprecedented expansion of required proprietary data sharing and a very real competitive threat for some of America’s most innovative firms.

These concerns were also echoed by Chairman of the Senate Finance Committee Orrin Hatch. Senator Hatch in his remarks noted that reporting requirements within the BEPS project “could impose significant compliance costs on American businesses and force them to share highly sensitive proprietary information with foreign governments.” Senator Hatch also urged the Treasury Department to cooperate and work with Congress on efforts to implement BEPS, as he highlighted that Congress alone had the ultimate authority to change U.S. tax code.

Manufacturers understand the crucial role tax policy plays in the ability of businesses around the world to compete and grow, and we support tax rules that are pro-growth, pro-competitiveness, fair and predictable. In contrast, the proposed and master file provision described would impose new and unnecessary compliance costs for an industry that is vital to the growth of the American economy.

The NAM is committed to working with Congress and the Treasury Department to ensure a fair and transparent tax climate that keeps manufacturers competitive in the global marketplace.