U.S. Republican tax writers criticize global corporate tax project
Republican tax law writers in the U.S. Congress and multinational businesses on Monday said international talks aimed at preventing companies from moving profits to low-tax countries could hurt the United States.
Representative Dave Camp and Senator Orrin Hatch of Utah warned of the effect on U.S. taxpayers from the Organisation for Economic Co-operation and Development’s (OECD) work to develop multilateral tax rules.
Known as the Base Erosion and Profit Shifting (BEPS) project, the OECD effort calls for revising tax treaties, tightening rules and more government tax information sharing.
The OECD, a Paris-based grouping of large economies, is scheduled to finish the BEPS project by the end of next year.
But some foreign countries are taking “aggressive actions” to levy more taxes on U.S. companies before the BEPS project is completed, said Camp, chairman of the tax-writing Ways and Means Committee in the House of Representatives.
“We are concerned that the BEPS project is now being used as a way for other countries to simply increase taxes on American taxpayers,” Camp said in a joint statement with Hatch of Utah.
The Republicans’ remarks came as corporate and government tax officials on Monday met at a conference to debate the BEPS project.
Speaking at the conference, a senior U.S. Treasury Department official blamed the United States, in part, for BEPS. The U.S. government has not thoroughly overhauled its tax code since 1986, leaving it riddled with loopholes that allow multinationals to game the system.
“Tax competition hangs in the air … is our own failure in the United States to do tax reform,” said Robert Stack, Treasury’s deputy assistant secretary for international tax affairs, at the conference.
BEPS got started in 2012 in discussions among European and U.S. leaders about multinationals not paying their fair share of taxes and governments’ corporate tax bases being undermined.
Multinational businesses can avoid a potential wave of new taxes by supporting, rather than resisting BEPS, a senior tax official with General Electric Co said at the conference.
“The only thing that worries me more than BEPS succeeding is BEPS failing,” said Will Morris of GE, who also heads the Business and Industry Advisory Committee (BIAC), a lobby group.
“We need to be involved in this project,” Morris said, adding that if the project fails, “many countries are going to act unilaterally.” (Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Cynthia Osterman)