U.S. Sens. Ron Wyden (D-OR) and Rob Portman (R-OH) released a discussion draft of legislation that would ban foreign tax credits for companies that pay taxes to the Russian government.
“We have bipartisan agreement on policies to ensure American taxpayers are not subsidizing the Russian war machine. Vladimir Putin continues to bomb civilians, and there are now credible reports and strong evidence of war crimes, including execution of civilians, are emerging from liberated cities,” Wyden and Portman said.
Wyden is chair of the Senate Finance Committee, and Portman is a member of the committee.
“If companies choose to keep doing business in Russia and paying taxes to Putin’s government in the face of these atrocities, they should forfeit their foreign tax credits and deductions for taxes paid to Russia in the United States. Russian oligarchs and companies supporting Putin also shouldn’t be getting tax benefits in the United States. These are simple propositions,” the lawmakers added.
The discussion draft of the bill states that there would be a denial of foreign tax credits for income taxes paid to Russia or Belarus. They would join an existing list of countries already ineligible for foreign tax credits, including North Korea, Iran, Syria, and Sudan. Companies that have already exited or are rapidly shutting down operations in Russia and Belarus may be eligible to have this turned off, such that losses from those countries could be treated as GILTI losses.
“The tax code already disallows lower tax rates and foreign tax credits for companies paying taxes to countries with rogue regimes. Our commonsense proposal simply adds Russia and Belarus to that list. We’re looking forward to working with our colleagues to move this legislation forward,” Wyden and Portman said.