US may count more countries as tax havens
19 Nov 2008
President-elect Barack Obama is likely to add three countries to the list of usual suspects in any clampdown on tax havens. As a co-sponsor of a recent bill on tax havens, Obama sanctioned the addition of Hong Kong, Switzerland and Luxembourg, which goes beyond the OECD's list of countries. 'There are lots of reasons for foreign companies doing business in the US to be concerned,' said Philip West, a partner in the Washington office of lawyers Steptoe & Johnson. Speaking at a seminar in London this morning on the changing landscape of tax regulations, the US lawyer, who served for nearly four years as the Treasury Department's international tax counsel, said there were a lot of provisions that would bite in a lot of different ways. There were likely to be proposals to: tighten taxation of foreign profits; to counter tax abuse; stop offshoring of jobs; and look at transfer pricing. West said that with a filibustering-proof Democratic majority in the Senate: 'I think we can expect to see changes in transfer pricing - if not from the White House, then from Capitol Hill.' West also warned foreign companies that he had recently noticed more audits by the Internal Revenue Service of foreign companies with permanent establishments. 'We may continue to see more audit activity in this area.' On transfer pricing, he warned companies to document their transactions properly prior to filing a return. If not, penalties can be in the region of 20% to 40%.