New York, N.Y., July 26, 2007 – America’s top global companies have expressed serious concern over proposed legislation, introduced as a potential means of funding the farm bill currently under Congressional consideration, that would discriminate against foreign companies operating in the United States. The proposal would effectively and unfairly raise taxes on foreign based companies which contribute to the U.S. economy and through American jobs and substantial U.S. based operations. It would also do serious damage to the tax treaty network on which U.S. business relies to prevent double taxation and provide certainty in its pursuit of business outside the U.S. The United States Council for International Business (USCIB), which represents U.S.-based multinationals and major exporters, said the measure could serve as an impetus for retaliation against American firms doing business in abroad.
“This bill, if enacted, would clearly violate an array of U.S. tax treaties, invite retaliation overseas, and damage our economy by discriminatorily raising taxes on foreign investment, hampering foreign investment and job creation in the United States,” said USCIB President Peter M. Robinson.
On the heels of introduction by Rep. Lloyd Doggett (D-TX) of the legislation in question, H.R. 3160, yesterday, the Administration appropriately expressed its strong opposition to the proposal in a statement of opposition delivered to Congress. The bill could come up for a vote in the House of Representatives today, without the benefit of the normal hearing process. Its effect would be to force foreign companies to pay higher withholding tax rates than their U.S.-owned counterparts on such payments as royalties, interest and management fees to their foreign affiliates. This would violate many bilateral U.S. tax treaties, which aim to both reduce double taxation and ensure cooperation with foreign tax authorities.
Mr. Robinson urged members of Congress to avoid measures targeting foreign firms specifically. “Such practices are often seized upon by foreign governments as an excuse to restrict market access and investment opportunities by American companies,” he noted. “We are concerned that formal and informal barriers to investment are on the rise in many countries. It is clearly in the interests of the United States, as the world’s largest source of overseas investment and one of the largest hosts for foreign direct investment to maintain a level playing field for foreign firms, to ensure that our own firms are treated fairly.”
Mr. Robinson noted that U.S. subsidiaries of foreign businesses account for more than five million U.S. jobs, supporting annual payrolls of over $300 billion.
USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment. Its membership includes more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3.5 trillion. As the exclusive American affiliate of three key global business groups – the International Chamber of Commerce, the International Organization of Employers, and the Business and Industry Advisory Committee to the OECD – USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade. More information is available at www.uscib.org.
Jonathan Huneke, VP communications, USCIB
+1 212.703.5043 (office), +1 917.420.0039 (mobile) or email@example.com
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