US President Seeking Reform of Foreign Tax Loopholes

The signs were there in November last year. Today US President Barack Obama publicly stated his intention to, as the BBC report says, close tax provisions that allow firms to put off paying taxes on profits made overseas as long as those earnings are invested back into the overseas subsidiaries. Although, whether that intention survives the lobbying.. As RTÉ reports

It is understood that many of the US companies in Ireland are beefing up their operations in Washington so that they can lobby on the proposed changes. It is also understood that the Industrial Development Authority is increasing its operation in North America to identify investment opportunities for Ireland that might emerge from President Obama’s multi-billion dollar stimulus plan, along his legislative programme – which includes his tax reform policy.

And our local administration?From the Whitehouse fact sheet

1) Replacing Tax Advantages for Creating Jobs Overseas With Incentives to Create Them at Home
· Reforming Deferral Rules to Curb A Tax Advantage for Investing and Reinvesting Overseas
· Closing Foreign Tax Credit Loopholes
· Using Savings To Make Permanent The Tax Credit for Investing in Research and Experimentation at Home

2) Getting Tough on Overseas Tax Havens
· Eliminating Loopholes for “Disappearing” Offshore Subsidiaries
· Cracking Down on the Abuse of Tax Havens by Individuals
· Devoting New Resources for IRS Enforcement to Help Close the International Tax Gap

And from the US President’s remarks on International Tax Policy Refrom.

Let’s begin with a simple premise: Nobody likes paying taxes, particularly in times of economic stress. But most Americans meet their responsibilities because they understand that it’s an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being.

And yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs. And many are aided and abetted by a broken tax system, written by well-connected lobbyists on behalf of well-heeled interests and individuals.

Indeed there are, Mr President..