U.S. Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee, outlined tax policies he is developing to hold Russia accountable for its invasion of Ukraine.
One of the measures Wyden is developing is the elimination of tax benefits for certain Russians and Belarusians operating in the United States. Several tax provisions benefit foreign persons with income connected to the United States. Under Wyden’s proposal, these tax benefits would be eliminated for individuals and entities listed by the Office of Financial Assets Control (OFAC). Also, the proposal gives the Treasury Secretary authority to list additional individuals and entities subject to this penalty, including the governments of Russia and Belarus.
“Russian oligarchs and companies supporting Putin shouldn’t be getting tax breaks in the United States. We should take away every special tax benefit for all sanctioned individuals, as well as give Secretary Yellen the authority to identify other individuals, companies, or governments supporting the invasion that should lose their tax goodies,” Wyden said.
Another policy is the elimination of preferential GILTI (Global Intangible Low-Taxed Income) rate on Russian and Belarusian income and denial of foreign tax credits and deductions for taxes paid to Russia and Belarus. So, if a U.S. corporation earns income and pays taxes to Russia or Belarus, they currently receive two significant tax benefits: the preferential GILTI tax rate of 10.5 percent and a foreign tax credit (FTC) that offsets U.S. taxes dollar-for-dollar. However, the tax code eliminates the lower GILTI rate and disallows FTCs for income earned in countries supporting terrorism or without diplomatic relations with the United States. These countries are currently Iran, North Korea, Syria, and Sudan.
Under Wyden’s proposal, countries participating in or supporting the invasion of Ukraine would be added to the list.
“In addition, the United States should not subsidize a single dollar of taxes paid to Russia, which will be used to fund this cruel war. If U.S. companies choose to keep paying taxes to Russia — taxes that are funding the bombing of hospitals for women and children—they should do it without a penny of help from American taxpayers. The Finance Committee is continuing to develop these and other proposals to hold Russia accountable for its bloody invasion,” Wyden said.