OFII opposes corporate residency provisions that would redefine a foreign-based company as a domestic corporation for federal tax purposes. Under such “management and control” proposals, companies could trigger this new tax treatment if they locate high-level executives or other key business functions in the United Sates. As a result, these firms would be paying taxes as a corporate resident to two different countries. Rather than allowing themselves to be subject to double tax, corporations could respond by moving “management and control” functions out of the United States leading to a loss of high-paying jobs and economic activity to countries that do not have the same corporate residency standards.
In the 113th Congress, problematic corporate residency provisions are seen in the International Tax Competitiveness Act (H.R. 1555) and the Stop Tax Haven Abuse Act (H.R. 1554) introduced by Congressman Lloyd Doggett (D-TX-25), and the CUT Loopholes Act (S. 268) introduced by Senator Carl Levin (D-MI).