US tax reforms are major threat to international tax co-operation - warns Europe
December 13, 2017
"Foreign governments and global tax experts are warning the Trump administration that the proposed Republican tax overhaul could violate international rules and risks igniting a trade war."
'Combined with a proposed steep cut in the 35 per cent corporate rate and other incentives to invest in the US, Clayton Utz's Melbourne tax partner Niv Tadmore said the reforms could "pull the rug from under the feet" of international tax cooperation. '
'Finance ministers from the United Kingdom, Germany, France, Italy and Spain wrote to White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin and Congress leaders warning that the US tax measures "could discriminate in a manner that would be at odds with international rules" overseen by the World Trade Organisation, according to the Financial Times. The letter warns of an "illegal export subsidy" that could be challenged by other governments. A tax bill passed by the US House of Representatives last month included a radical 20 per cent "excise" forecast to raise $US155 billion over a decade from payments by US companies to foreign affiliates for royalties, management fees, service payments and goods.'
This is all potentially very destabilising for global trade and global economic growth, but one needs to note that these days, the USA is only 15% of Global trade and it may just end up isolating itself from much of the rest of the world - particularly from that part of the world where more of the economic growth will occur over the next 10 and 20 years.
I'm busy working on my blog posts. Watch this space!