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Less than a week after President Donald Trump announced that the U.S. would pull out of the Paris Climate Accord, the U.S. government abstained from signing another multilateral agreement in the French capital meant to combat tax evasion by companies operating in multiple countries.

The agreement, formed in conjunction with the Paris-based Organization of Economic Co-operation and Development, sought to stymie profit-shifting by multinational firms, a practice that costs the U.S. government an estimated $100 billion in foregone tax revenues each year. The OECD pegs the global annual tax loss at up to $240 billion.

On Wednesday, 68 countries signed the agreement to prevent a practice known as “treaty shopping,” in which a company with operations abroad attempts to capitalize on bilateral tax accords between the nation in which it’s based and any foreign country where it also operates. The U.S., which has been involved in the pact’s development, was not among the signatories, it wasn't even present.

The U.S. has its own version, the “limitation on benefits” rule, which is more quantitative, while the principal purposes test gives the taxing authority the power to determine whether firms are abusing tax laws.

The Business Roundtable — an advocacy group representing chief executives of large corporations, which counts Caterpillar’s CEO as a member — spent $2.31 million in federal lobbying on issues that included the OECD initiative in the first quarter of 2017. Although the group did not respond to IBT questions, the chair of its Tax and Fiscal Policy Committee, EY chief executive Mark Weinberger, wrote a letter to former Treasury Secretary Jack Lew in April 2016 urging the Obama administration to “accept” the OECD project. Weinberger cited compliance burdens in the event the U.S. did not embrace the agreement.

Gascoigne, of the FACT Coalition, pointed out that, absent the U.S. signing the OECD agreement, the American government “will have to go around with countries one by one to negotiate treaties,” a practice he said “diverts business resources away from productive investments and into tax planning shenanigans.”

The missing U.S. signature also affects the American government’s reputation as a global leader, as well as ordinary Americans who “are footing the bill for this,” Gascoigne said.

More: http://www.ibtimes.com/political-capital/other-paris-agreement-us-walks-out-accord-combat-global-corporate-tax-evasion

#Economics #Geopolitics #Lobbying #Tax