[World Tax News] US Introduces Corporate Tax Dodging Prevention Bill to Ensure Fair Corporate Tax Payments and More

Editorial Team – [2024] 161 taxmann.com 545 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. US introduces Corporate Tax Dodging Prevention Bill to ensure fair corporate tax payments

US Senator Bernie Sanders and Congresswoman Jan Schakowsky introduced a bill designed to eliminate tax loopholes utilized by corporations, halt tax incentives for businesses relocating jobs overseas, and prevent companies from concealing profits in offshore tax havens.

Additionally, this legislation proposes reverting the corporate tax rate reduction and reinstating the top rate to 35 percent, which is projected to yield at least an additional $1.3 trillion over the span of 10 years.

In particular, this legislation would overhaul the tax code by:

(a) Restoration of progressive corporate tax rate of 35%.

(b) Ending the rule allowing American corporations to pay a lower or zero percent tax rate on offshore earnings compared to domestic income.

(c) Closing loopholes allowing American corporations to shift income between foreign countries to avoid US taxes.

(d) Eliminating the Interest-Free Deferral of Repatriation Tax Payments.

(e) Repealing the “check-the-box” and “CFC Look-Thru” offshore loopholes.

(f) Preventing multinational corporations from stripping earnings out of the US by manipulating debt expenses.

(g) Preventing American corporations from avoiding US taxes by inverting.

(h) Reforming and tightening the Based Erosion and Anti-Abuse Tax.

(i) Preventing extractive and gambling companies from disguising royalty tax payments to foreign governments as foreign income taxes.

(j) Preventing American corporations from claiming to be foreign by using a tax haven post office box as their address.

(k) Preventing the abuse of tax treaty benefits.

(l) Repeal the Tax Break for Foreign Derived Intangible Income.

Source: Press Release by Bernie Sanders

Corporate Tax Dodging Prevention Act

2. New Zealand issues determination on 2024 international tax disclosure exemption

The New Zealand Inland Revenue has released a determination on international tax disclosure exemption 2024. This determination reduces the obligation for taxpayers to disclose foreign entity interests for the income year aligning with the tax year ending on March 31, 2024.

The extent of the 2024 disclosure exemption mirrors that of 2023. In essence, the 2024 disclosure exemption eliminates the need for a resident to disclose:

(a) An interest in a foreign company if the resident has an income interest of less than 10% in that company and either that income interest is not an attributing interest in a FIF, or it falls within the $50,000 de minimis exemption (see section CQ 5(1)(d) and section DN 6(1)(d) of the ITA). However, this exemption doesn’t extend to individuals who have chosen to exclude themselves from the de minimis threshold by reporting FIF income or loss in their income tax return for the relevant year.

(b) If the resident is not a widely-held entity, an attributing interest in a FIF that is a direct income interest of less than 10%, if the foreign entity is incorporated (in the case of a company) or otherwise tax resident in a treaty country or territory, and the fair dividend rate or comparative value method of calculation is used.

(c) For widely-held entities, if they hold an attributing interest in a FIF directly under 10% (or an equivalent interest in a foreign PIE), using the fair dividend rate or comparative value method, they must disclose the end-of-year New Zealand dollar market value of these investments, categorized by the jurisdiction where the attributing interest in a FIF is held or listed.

The 2024 disclosure exemption also eliminates the obligation for non-residents or transitional residents to disclose their holdings in foreign companies and FIFs.

Source: Determination setting out the 2024 international tax disclosure exemption

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