Boustany: Norway, U.S. need new deal
U.S. Rep. Charles Boustany is leading an effort to change terms of a treaty with Norway that he says puts at a disadvantage U.S. companies doing construction work on the Outer Continental Shelf.
The Lafayette Republican and his Louisiana colleagues wrote to Treasury Secretary Jack Lew on Thursday, asking him to reform the U.S.-Norway Tax Treaty to impose a withholding tax of some 17.5 percent on the Norwegian companies. That, he wrote, would help level the competition for business between American offshore construction companies, which must pay U.S. corporate taxes of almost 40 percent while operating on the OCS, and their Norwegian competitors, who, because of changes in their country’s tax laws, largely escape any taxation.
In the letter to Lew, Boustany and his colleagues said Norwegian tax laws have changed since the Americans and Norway last negotiated a treaty. In 2007, Norway expanded application of its tonnage tax benefits, which are usually limited to trade and transport of goods, and allowed Norwegian companies doing construction on the OCS to largely evade taxes.
“…To our knowledge,” the congressmen wrote, “no other country currently provides these benefits to activities outside (the) scope” of trade and transportation.
By largely escaping taxes, both in the U.S. and in Norway, the Norwegian companies gain a substantial edge in pricing for services over their American competitors, the congressman said.
The Norwegian companies evade U.S. taxes on the OCS by renting or leasing vessels from a parent Norwegian company, which enables them to escape Permanent Establishment status in the U.S. If the Norwegian companies had Permanent Establishment status, they would be made to pay a 30 percent withholding tax.
Boustany spokesman Jack Pandol said he was uncertain how much business was involved, especially with the decrease in drilling in the Gulf of Mexico. But business ebbs and flows, he said.
“Every little bit of business matters these days, so U.S. companies are feeling an extreme pinch right now with the low oil prices,” he said.
About 10 Norwegian companies, perhaps more, are operating in the OCS, Pandol said.
Louisiana companies affected include Hornbeck Offshore, Harvey Gulf, Otto CANDIES and Edison Chouest Offshore.
In a statement issued last week, Boustany, who chairs the Tax Policy Subcommittee of the House Ways & Means Committee, said:
“It’s just not right that American companies operating off our shores could be at a significant tax disadvantage to one of the most socialist countries in the world. We need to fix this right away.
“Given a fair and level playing field, American businesses can compete with anyone on Earth. I’m proud to lead my colleagues to ensure our companies and the workers they employ are given a fair shot.”
U.S. Sens. David Vitter, R-Metairie, and Bill Cassidy, R-Baton Rouge; and House members Steve Scalise, R-Metairie; John Fleming, R-Minden; Cedric Richmond, D-New Orleans; Ralph Abraham, R-Alto; and Garret Graves, R-Baton Rouge; also signed the letter.
