Archive for July, 2011

US Congress introduces Anti-Offshore Bill

Wednesday, July 13th, 2011

The new legislation, entitled the Stop Tax Haven Abuse Act, has been introduced by Carl Levin, the Democrat Chairman of the US Senate Permanent Subcommittee on Investigations. The Act is aimed to fight so-called offshore tax loopholes.

When introducing the legislation, Levin stated that the United States cannot afford offshore tax abuses that are robbing the Treasury of USD 100 billion in lost revenue yearly and increasing the tax burden on Americans. It should be noted that this is the 5th Congress in which Levin has introduced a comprehensive bill to fight offshore and tax shelter abuses.

A number of provisions from past bills have made it into law. Levin’s efforts also helped spur enactment of the Foreign Account Tax Compliance Act (FATCA) that is designed to obtain information on overseas investments by US residents. It is worth noting that, when Levin was a member of the Senate, he co-sponsored Levin’s offshore tax bills in 2005 and 2007.

A provision of the bill would close an existing tax loophole that allows credit default swap payments to escape taxation if sent from the US to persons offshore, such as an offshore hedge fund or foreign bank. The bill would treat credit default swap (CDS) payments sent offshore from the US as taxable US-source income.