The so-called Stop Tax Haven Abuse Act was introduced yesterday, the day by which Americans are normally expected to file their taxes for the previous calendar year, by a Democrat from Texas, Rep Lloyd Doggett.
The act seeks to close loopholes currently used by corporations for tax evsion and, In Rep Doggett’s words, "strengthening the enforcement of our tax laws".
It would also require SEC-registered corporations to report annually on the number of employees, sales, financing, tax obligations and tax payments on a country-by country basis, which, Rep Doggett says, would "[shed] more light on the extent of use of tax havens".
In addition, it provides for additional penalties for failing to disclose offshore holdings, and for promoting "abusive tax shelters".
Rep Doggett, a member of the House Ways and Means Committee, introduced two other pieces of legislation as well yesterday, including one aimed at ending the practice of "treaty-shopping" by companies in order to avoid having to pay US tax.
CUT Loopholes Act
Doggett’s proposed legislation is described as being similar to another effort, known as the Cut Unjustified Tax Loopholes Act (or CUT Loopholes Act), unveiled two months ago by Sen Carl Levin, a Democrat from Michigan, and Sen Sheldon Whitehouse, a Democrat from Rhode Island.
Sen Levin, who has been in office since 1979, was a sponsor of an earlier piece of legislation known as the Stop Tax Haven Abuse Act in 2007, 2009 and 2011, which never made it beyond the committee stage, but which was said to have been subsumed into the section of the 2010 HIRE Act known as the Foreign Account Tax Compliance Act (FATCA).
As reported, this was signed into law by President Obama that year, and obliges non-US banks and financial services institutions to provide a raft of data on any American accountholders they have to the US tax authorities.
Global move to transparency
In addition to coinciding with Tax Day in the US, Rep Doggett’s bill also coincides with a global move by governments to force greater transparency on individuals and corporations.
Last week, the UK and the European Union’s four other largest members announced plans to develop and pilot a new, "multilateral tax information exchange agreement”, which they noted was based on a model intergovernmental agreement for complying with FATCA that the five countries agreed to last year with the Americans.
This announcement was quickly followed by vows from a number of other countries, including Luxembourg, Poland, the Netherlands, Belgium and Romania, that they, too, were committed to the idea of automatic information exchange.