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A recent publication by the Independent Commission for the Reform of International Corporate Taxation is calling on taxing authorities to increase tax enforcement for the illegal use of tax havens. The authors of the publication state that the move will result in increased tax revenue that can then be used to help fund public service workers and other essential employees that play a vital role helping keep the country running during the pandemic.

Cruise lines as an example: Should we tax instead of provide aid?

The publication provides the example of cruise lines to elaborate their point. The group notes that most cruise lines are located out of a tax haven, like Panama, to reduce tax obligations. Yet, the group notes these businesses are now seeking federal tax aid. Instead of providing this relief, the group is calling on federal taxing authorities to agree to a minimum effective corporate tax rate of 25% and mandated country-by-country reporting.

Will the U.S. implement these measures?

Although the publication provides some points to discuss, it is unlike the U.S. will implement these measures in the near future. However, the government has discussed various approaches to address corporate tax rates during the pandemic. One of the most recent discussions involves consideration of cutting the corporate tax rates for companies that are currently operating abroad but bring their operations back within the United States.

What does this mean for U.S. businesses?

Those who have a corporate business structure are wise to keep abreast of tax law changes. Those who are concerned their business practices may run afoul of applicable tax law are wise to seek legal counsel to better ensure compliance and mitigate the risk of allegations of wrongdoing.