U.S. Business Chiefs Fight Global Taxation Changes
Major U.S. companies are pushing back against an effort to reform the global taxation system to prevent multinational businesses from exploiting differing national tax rules and loopholes.
The influential Business Roundtable, a gathering of top U.S. chief executives, said in a letter to U.S. Treasury Secretary Jacob Lew that the project to close gaps in taxation of cross-border income threatens their businesses and U.S. workers.
The project by the Organization for Economic Cooperation and Development could result in "new, unprecedented taxes on trade and investment that will freeze business investment and slow economic growth," they said.
The Roundtable spoke out as the OECD pushes forward with its program to help ensure companies don't hide taxable income in more favorable jurisdictions, or via accounting tricks.
The project has gained support of governments and social groups angered over tax avoidance.
The Business Roundtable said in its letter to Secretary Jacob Lew that the existing system has effectively avoided double taxation of companies, making cross-border investment and trade easier.
Many of their members fear, they said, that the BEPS project is now "being used by some governments for the purpose of imposing extraterritorial taxes on U.S. business income."
"Increased taxation of U.S. business investment by foreign governments and the inevitable increase in protracted cross-border tax disputes will slow the U.S. economy and hurt American workers."
- Going after tax avoidance -
The BEPS project was launched in 2013, aiming to help governments deal with how multinationals allocate taxable profits on their accounts.
As seen in well-publicized cases of U.S. companies recently, multinationals are often able to declare the income as arising from locations different from where the business activity took place, cutting their tax bills.
Tech giants Apple and Google have both been assailed inside the United States for moving profits to low-tax countries where they have little business.
And coffee chain Starbucks admitted in 2012 that it had not paid corporate taxes in Britain for years despite earnings hundreds of millions of dollars in sales every year.
But while the U.S. businesses say they accept fair efforts at taxing profits, they worry that the BEPS project, due to present its conclusions by September, might go too far, forcing them to reveal important confidential information on their business country by country.
A Treasury spokesperson told Agence France Presse the U.S. government shares "many of the concerns expressed by the Business Roundtable in their letter."
And senior Republican lawmakers are also raising concerns. In a statement Representative Dave Camp and Senator Orrin Hatch said they worry that the BEPS project is "being used as a way for other countries to simply increase taxes on American taxpayers."
They also said the fast BEPS timeframe to finalize its conclusions limits their ability to study and comment on rules that the OECD proposes.
Martin Sullivan, chief economist at taxation consultants Tax Analysts, said U.S. companies have legitimate reasons to worry about double taxation.
"But what we're talking about is profits that aren't subject to any tax," said Sullivan, a former U.S. Treasury official.
Businesses are avoiding the real issue at hand, he said: "Are we going to allow profits to be shifted into tax havens where they're exempt from tax? We have to ensure that this income is taxed at least once."
Pascal Saint-Amans, Director of the OECD's Centre for Tax Policy and Administration, said they understand the concerns of U.S. businesses, and "are working on ways to limit uncertainty."
"In the long run, for countries to work together... is the best way to make sure that global businesses are taxed appropriately and not more than once."
Source: Agence France Presse
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