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Tax News Friday 31st August 2007
Doggett Law to lessen UK Tax AppealA new measure that gets its name from the Texas Senator that coined the idea is set to considerably lessen the appeal of London and other European financial centers that have favourable tax treaties with the US.Multinational companies that have US subsidiaries are dismayed by the new plans which will see new taxes of up to 30% imposed, costing up to $7.5bn over the next 10 years. The measures are constructed to put a stop to what is known as treaty shopping, whereby multinationals structure transactions to take advantage of the most favourable American double tax treaties, in order to avoid US tax. Diplomats and business groups have stated that these companies are not doing anything illegal and that the process is a legitimate method of tax migration. It has fuelled concerns that Congress, in the hands of the Democrats, is anti-business and pro-tax, with some multinationals considering boycotting the US in favour of Canada or Mexico. Multinationals based in countries without a double tax avoidance treaty with the US and subsidiaries within the US will be hit hardest, should the bill be enacted. The bill is due to be considered in September but faces strong opposition from Republicans who have warned of up to 5 million job losses within the US and the possibility of retaliation upon US companies operating abroad. The danger is that multinations will consider the US a less friendly place to do business and discourage future investment. Other Tax Recent News and Articles |
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