US tables new Anti-Tax Haven Legislation

A new piece of anti-tax haven legislation has been introduced into the US House of Representatives by Lloyd Doggett (D-Texas).

HR 5328, The International Tax Competitiveness Act, includes many clauses previously included in similar pieces of legislation that did not make it to the statute book due to Republican resistance. Doggett was one of the sponsors of the Stop Tax Haven Abuse Act. That law was not passed, however, much of it was incorporated in the Foreign Account Tax Compliance Act of 2009 (HR 3933, S 1934), which became law as part of the Hiring Incentives to Restore Employment (HIRE) Act, changing the system of withholding on payments made to non-US persons.

Key points of the new legislation would be as follows:
– to tighten corporate residency rules to prevent corporations with a preponderance of US officers from basing themselves overseas;
– to make it much more difficult for corporations to receive income from IP assets in foreign (low-tax) jurisdictions;
– to repeal the 80% ‘active income’ provision;
– to repeal the ‘boot-within-gain’ rule which allows favorable tax treatment of dividends paid during corporate reorganizations.

It should be noted that previous attempts to pass clauses like the above-mentioned have met resistance from major business organizations and from Republicans in general.

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