Hatch, Camp Statement on 2014 OECD Tax Conference
Washington, DC – Today Senate Finance Ranking Member Orrin Hatch (R-UT) and Ways and Means Committee Chairman Dave Camp (R-MI) released the following statement on the 2014 Organisation for Economic Co-operation and Development (OECD) conference on Base Erosion and Profit Shifting (BEPS) taking place this week in Washington, DC.
“In 2013, the OECD launched its BEPS project. However, we are concerned that the BEPS project is now being used as a way for other countries to simply increase taxes on American taxpayers. When foreign governments – either unilaterally or under the guise of a multilateral framework – abandon long-standing principles that determine taxing jurisdiction in a quest for more revenue, Americans are threatened with an un-level playing field. Such actions put pressure on the U.S. government to respond by asserting taxing authority over foreign activity generating U.S.-source income on similar grounds.
“As Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, testified at a June 13, 2013 hearing held by the Committee on Ways and Means of the U.S. House of Representatives:
"It is important to note that the work of the OECD is done entirely by consensus. That is, measures cannot be adopted without the consensus of all member countries…. In addition, countries have recognized that uncoordinated, unilateral action to exert taxing rights over cross-border activity likely will result in double or multiple taxation of cross-border investment, leading to increased disputes among governments and harming economic growth at a time when the world can least afford it.’
“In addition to the aggressive actions by some foreign countries to levy more taxes on U.S. taxpayers before a consensus has been reached, the process established by the OECD raises serious questions about the ability of the United States to fully participate in the negotiations. The extremely ambitious time frame for conclusion of the 15 different work plans limits our ability to review, analyze and comment on the rules being proposed. The issues under negotiation are complex and can have far reaching and negative consequences for the competitiveness of U.S. workers. We are willing to work through these issues until an international consensus exists and we have achieved the right answer, but we will not be rushed into a bad outcome.
“The Treasury Department has our full support – and expectation – to aggressively represent American employers and their workers in the BEPS negotiations, while responsibly consulting with Congress as its discussions in the BEPS context proceed. The focus needs to return to BEPS – not on ways foreign countries can raid the American Treasury.
“Ultimately, we believe that the best way for the United States to address the potential problem of BEPS is to enact comprehensive tax reforms that lower the corporate rate to a more internationally competitive level and modernize the badly outdated and uncompetitive U.S. international tax structure. Such reforms would put American companies on a more level playing field with their foreign competitors and reduce the pressure on American companies to engage in elaborate tax planning that, while legal, is also needlessly complex and economically inefficient, to deal with the tax advantages their competitors have over them.”