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| Version 2 | Version 3 |
|---|---|
| Obama crackdown on tax loopholes | Obama crackdown on tax loopholes |
| (about 1 hour later) | |
| President Barack Obama has proposed outlawing offshore tax-avoidance techniques in a move that could hit US corporations with overseas divisions. | President Barack Obama has proposed outlawing offshore tax-avoidance techniques in a move that could hit US corporations with overseas divisions. |
| His proposals would axe some tax deductions for firms that earn profits in countries with low tax rates. | His proposals would axe some tax deductions for firms that earn profits in countries with low tax rates. |
| His plan envisages 800 extra federal agents to police the laws, and may reap $210bn (£140bn) in tax over the decade. | His plan envisages 800 extra federal agents to police the laws, and may reap $210bn (£140bn) in tax over the decade. |
| The president said he wanted to "make it easier" for US companies to create jobs at home. | The president said he wanted to "make it easier" for US companies to create jobs at home. |
| 'Corporate loopholes' | 'Corporate loopholes' |
| He wants to 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. | He wants to 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. |
| "The steps I am announcing today will help us deal with some of the more egregious examples of what is wrong with our tax code," he said at a joint announcement with Treasury Secretary Timothy Geithner. | "The steps I am announcing today will help us deal with some of the more egregious examples of what is wrong with our tax code," he said at a joint announcement with Treasury Secretary Timothy Geithner. |
| While "most Americans meet their responsibilities" with regard to tax, he said there were others shirking theirs. | While "most Americans meet their responsibilities" with regard to tax, he said there were others shirking theirs. |
| He now needs congressional approval for the changes, which some business leaders oppose, before they could come into effect in 2011. | He now needs congressional approval for the changes, which some business leaders oppose, before they could come into effect in 2011. |
| The president said his proposals would fix a tax code "full of corporate loopholes " which encourage US companies to send jobs overseas. | The president said his proposals would fix a tax code "full of corporate loopholes " which encourage US companies to send jobs overseas. |
| 'Balance' | 'Balance' |
| His administration wants to prohibit American firms from taking deductions on the expenses for their overseas operations, until after they have booked their profits in the US. | His administration wants to prohibit American firms from taking deductions on the expenses for their overseas operations, until after they have booked their profits in the US. |
| However, expenses on research and experimentation would be exempt. | However, expenses on research and experimentation would be exempt. |
| In addition, at present US firms are allowed to claim a credit against their American taxes for foreign taxes paid. | In addition, at present US firms are allowed to claim a credit against their American taxes for foreign taxes paid. |
| But the Obama administration wants to end this practice as it says some firms take advantage of this by artificially increasing the amount of taxes they owe. | But the Obama administration wants to end this practice as it says some firms take advantage of this by artificially increasing the amount of taxes they owe. |
| And the administration also wants to restrict the strategy that allows US-based multinational firms to shift profits into low-tax jurisdictions. | And the administration also wants to restrict the strategy that allows US-based multinational firms to shift profits into low-tax jurisdictions. |
| To prevent this it would require some foreign subsidiaries to be considered as separate corporations for US tax purposes. | To prevent this it would require some foreign subsidiaries to be considered as separate corporations for US tax purposes. |
| The president also called for more transparency in bank accounts held by US citizens in tax havens such as the Cayman Islands. | The president also called for more transparency in bank accounts held by US citizens in tax havens such as the Cayman Islands. |
| It is proposed that reporting requirements for overseas investments are tightened and that tougher penalties are introduced for those who fail to report foreign accounts. | |
| US Treasury Secretary Timothy Geithner has said the package of proposals "would bring balance to our tax code". | US Treasury Secretary Timothy Geithner has said the package of proposals "would bring balance to our tax code". |
| But Drew Lyon, a tax expert at PriceWaterhouse Coopers, said: "It's really hitting most Fortune 100 companies that depend to a great deal on growth of foreign markets for growing their total earnings." | But Drew Lyon, a tax expert at PriceWaterhouse Coopers, said: "It's really hitting most Fortune 100 companies that depend to a great deal on growth of foreign markets for growing their total earnings." |