President Barack Obama will propose on Monday to outlaw three offshore tax-avoidance techniques US companies such as Caterpillar Inc and Procter & Gamble Co want to use to save $190 billion over the next decade and make it riskier for Americans to stash money in tax-haven banks.
Obama and Treasury Secretary Timothy Geithner will target a strategy that allows US-based multinational companies to effectively hide from the Internal Revenue Service the role their foreign subsidiaries play in shifting profits into low-tax jurisdictions such as the
The proposal, affecting tax rules known as 'check the box,' would net $86.5 billion in revenue between 2011-2019 by overhauling regulations created in Democrat Bill Clinton's administration and later written into law by a Republican- controlled Congress after Clinton tried to withdraw the rules.
The proposal, combined with a $60.1 billion plan to limit many expense deductions for American companies that take advantage of laws allowing them to defer tax on foreign profits and a $43 billion crackdown on abusive foreign tax credits, would be the biggest tax increase on US corporations since 1986. Obama also would shift the burden of proof to individuals when the IRS alleges assets are being hidden in certain offshore bank accounts, the official said.
'This is bad stuff,' Kenneth Kies, a tax lobbyist at the
While the Obama administration expects companies to lobby against the proposals, the president believes his tax proposals strike at loopholes that give multinational companies an unfair advantage over companies that operate only within the
In 2004, US-based multinational corporations paid about $16 billion of
Source: The Washington
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