Choose a different title name

[SloJon]

W-A-A-A-A-A-A...

Barack Obama's crackdown on US tax dodgers is just beginning

Nick Mathiason Tuesday 5 May 2009 20.26 BST

President Obama's announcement of a US crackdown on corporate tax avoidance is just the beginning, according to Washington insiders who believe further measures will be outlined this year. Obama moved late on Monday to make it harder for US multinationals to outsource American jobs to poorer countries to save money, as well as stopping companies hiding behind offshore operations to save tax. Obama's tax-dodging initiatives are slated to raise $210bn (£140bn) over 10 years, but have been attacked by US business groups who say it will undermine US corporations, placing them at a competitive disadvantage.

Obama unveiled measures to clamp down on giving tax relief to companies who spend money on overseas subsidiaries until profits from those subsidiaries flow back to the US. It is also stopping US firms from gaining tax relief on artificial claims they have paid taxes overseas. There are additional stringent proposals for wealth managers to disclose information about rich clients or face the presumption that they are facilitating tax evasion.

Obama's insiders are conscious that nearly a third of US profits in 2003 came from only three jurisdictions: Bermuda, the Netherlands and Ireland. And they have drawn attention to a report from the US government accountability office published in December that found 83 of the 100 largest US corporations have subsidiaries in tax havens. On the campaign trial, Obama repeatedly pointed out that one office address in the Cayman Isles alone housed 18,857 corporations, very few of which have a physical presence in the islands.

There are suggestions London could benefit from Obama's crackdown as US companies may choose to relocate after Obama's reforms, which will be debated in Congress. John Whiting, tax partner at PricewaterhouseCooper's, said: "This is Obama carrying through his campaign promises. It sounds broad and tougher and shows an intent to raise an awful lot of money from overseas. If the US is indicating that it will tighten up tax rules, it may give an opportunity for the UK as a competitive environment for international businesses." Raymond Baker, Washington-based Global Financial Integrity director, said: "This signals the importance given to these issues by President Obama. The US has certainly opened the door to apply these more widely."

To fund Obama's fiscal stimulus plan and ambitious healthcare proposals, the president is expected to focus on the billions of dollars lying in secretive jurisdictions. It was the president who brokered a deal on tax havens at last month's G20 meeting in London by persuading China to agree to sign up to a blacklist of tax havens. Tim Geithner, the treasury secretary, said the measures were "balanced" and that increased taxes would be partly offset by a research and experimentation credit worth $75bn over the next 10 years, and allowing research exemptions for the change to the deferral rule.

http://www.guardian.co.uk/business/2009/may/05/obama-tackles-tax-avoidance