When the federal government needs to raise revenue, it often looks to those paths with the least political resistance.  The false perception that U.S. subsidiaries are “foreign” companies and therefore, do not represent voters, leaves them vulnerable to tax hikes.  OFII works to ensure that policymakers appreciate the millions of American jobs (and voters) dependent on foreign direct investment.  Further, OFII educates Congress on the unique application of international tax rules to U.S. subsidiaries and advocates for non-discriminatory tax treatment of insourcing companies....

The 80/20 company rules benefit U.S. corporations who primarily engage in an active trade or business in foreign jurisdictions. Despite the myriad valid reasons for maintaining such rules, the Administration has proposed repealing them entirely. OFII supports modifications to the existing rules to prevent abuse of the rules while maintaining the benefits for legitimate users.

In the 112th Congress, problematic corporate residency provisions are seen in the International Tax Competiveness Act introduced by Congressman Lloyd Doggett (D-TX-25), companion legislation introduced by Senator Jay Rockefeller (D-WV), and the Stop Tax Haven Abuse Act and the CUT Loopholes Act introduced by Senator Carl Levin (D-MI). These corporate residency provisions seek to redefine a foreign-based company as a domestic corporation for federal tax purposes if the “management and control” of a company occurs primarily in the United States.  Thus, companies may see an increase in...

When Congress passed the $700 billion in Troubled Assets Relief Program (TARP) money to rescue banks and other financial institutions in 2008, it required the Department of Treasury to recoup all financial losses by 2013. To help accomplish this, the Administration has recommended the enactment of a “financial institution tax” designed to recover TARP expenditures and establish a bailout fund to protect taxpayers in the future. The proposed tax would be levied on only those financial institutions that have more than $50 billion in assets and were eligible to receive TARP money in 2008. OFII...

The Foreign Account Tax Compliance Act (FATCA) was introduced on October 27, 2009 by Chairman Baucus (D-MT), Chairman Rangel (D-NY-15), Senator Kerry (D-MA), and Representative Neal (D-MA-2) to address concerns about U.S. persons avoiding U.S. tax through offshore bank accounts. It was passed as part of the Hiring Incentives to Restore Employment Act (H.R. 2847). Though OFII supports the overarching goals of FATCA, we believed the bill's original scope was too broad and could have negatively impacted foreign corporations doing business and investing in the U.S. OFII submitted comments (see below)...

For several years, OFII has attempted to seek parity for foreign companies listed on U.S. exchanges and subject to U.S. securities law in regard to a corporate safe harbor the IRS has proposed for the filing of a Report of Foreign Bank and Financial Accounts (FBAR).  On June 5, 2006 OFII sent a detailed letter to the appropriate IRS officials pointing out the discriminatory treatment in the proposed revised filing instructions:  U.S.-based publicly traded firms could file a single FBAR form on behalf of all employees that had signature authority on certain foreign bank accounts, whereas foreign-based...

The Foreign Investment in Real Property Tax Act, or FIRPTA, was established in 1980 to ensure foreign investors paid a tax on any gains when they sold American real estate. Since then, laws and regulations have changed in such a way as to make this policy concern moot, making FIRPTA largely unnecessary. Rather than repealing a superfluous law, however, the IRS at the end of 2008 issued a notice that broadens considerably the scope of FIRPTA. Under the notice, foreign investment in infrastructure projects like toll roads, bridges and wind farms would likely face significant double taxation on capital...

In 2011, proposals found in legislation introduced by Rep. Richard Neal (H.R. 3157) and by Senator Robert Menendez (S. 1693), and in the Administration’s FY 2013 budget proposal (pg 98) would disallow U.S. subsidiaries of foreign-based reinsurance companies from deducting non-taxed reinsurance premiums paid to their foreign affiliates. OFII remains opposed to such measures since they limit the ability of U.S. reinsurance subsidiaries to deduct legitimate business expenses and violate fundamental international tax principles.  These firms, already incorporated in the U.S. and subject to...

“Thin Capitalization Rules” found in Internal Revenue Code Section 163(j) limit tax deductions companies can take on loans from related and unrelated (with a parent company guarantee) parties.  Though these rules apply to both domestic and foreign-based firms, in practice, they overwhelmingly target OFII members because they are more likely to borrow money from a parent company to conduct business in the U.S. There have been numerous attempts by Congress and the Administration to tighten provisions of 163(j).  Most recently, the Administration’s FY 2013 budget (pg 99) includes...

The United States has entered into double tax treaties with foreign countries for over 70 years.  Tax treaties are designed to encourage cross-border investment and economic activity.  They provide a way to resolve taxation disputes between countries, help authorities enforce tax laws, and reduce barriers to foreign direct investment, such as double taxation and high withholding tax rates.  OFII supports the expansion of the U.S. treaty network.  Tax treaties with Switzerland, Hungary, and Luxembourg are currently pending in the Senate.  In June 2011, the Senate Committee...

Representative Lloyd Doggett (D-TX-25) first introduced the tax treaty override provision in 2007 as a pay-for in the House version of the 2007 Farm Bill (H.R. 2419). This measure limited tax treaty benefits on deductable payments made by a U.S. subsidiary of a foreign based company to its foreign affiliates, unless the payment went to its foreign parent corporation. OFII aggressively engaged the House, the Senate and the Administration to oppose this proposal as it sharply undermined the international tax treaty network. Ultimately, Doggett’s provision was not included in the bill that was signed...