Monday, March 02, 2009

Anti-Tax Haven Bill Coming: U.S. Senate Aides


Offshore tax havens used by rich Americans in Switzerland, the Cayman Islands and other nations are targeted for shutdown by a bill to be offered in the U.S. Senate on Monday, said senior Senate aides.

In legislation that expands on a bill co-sponsored last year with then-Senator Barack Obama, Senator Carl Levin will propose a broad crackdown on tax avoidance schemes estimated to deprive the U.S. government of more than $100 billion a year.

The bill comes just two days ahead of a Senate hearing where a senior UBS AG executive is due to testify about an investigation of the Swiss banking giant.

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Levin in a statement given to Reuters. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year.

"We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will."

Companion legislation is expected to be introduced in the U.S. House of Representatives, the aides said.

Both bills will face committee review and some political opposition. Bankers at UBS and other financial institutions have long been among the largest contributors to U.S. politicians' campaigns.

Since last year, three provisions have been added to the Senate bill. One would classify U.S.-controlled foreign corporations as domestic for income tax purposes. Another would close an offshore tax dividend loophole that lets people dodge payment of U.S. taxes on U.S. stock dividends, the aides said.

The third provision would expand tax-reporting requirements for passive foreign investment corporations, they said.

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