US House Moves Against Offshore-Based Firms

by Mike Godfrey, Tax-News.com, Washington

22 July 2004

The US House of Representatives last week dealt a blow to many US multinational firms by voting for an amendment that will prevent the government-backed Export-Import bank from lending to firms which have incorporated offshore for tax purposes.

The amendment to an annual foreign aid bill was approved in a 270-132 vote, and marked the second occasion this year that lawmakers have moved against firms based offshore, after the revelation in June that Accenture, based in Bermuda, was bidding for a $10 billion Homeland Security contract.

Commenting on the firms that the new measure is designed to target, the bill’s sponsor Rep. Bernie Saunders, a Vermont Independent, remarked: “They don't want to pay taxes in America. Not them. That's for the suckers of this country.”

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Its mission is to assist in financing the export of US goods and services to international markets.

Responding critically to the Sanders amendment, the bank warned that the measure will put many thousands of US jobs at risk.

“The foreign buyers will simply buy from other suppliers who do not make their products in the United States. This will result in the loss of high-paying American jobs,” noted Peter Saba, the institution’s chief operating officer.

He warned that the proposed provision would limit Ex-Im Bank's ability to provide credits to local companies in locations such as Panama, Antigua and the other noted countries who buy US goods, restricting opportunities for US exporters to the benefit of competitor countries.

“Ex-Im Bank is not a tool for tax or other regulatory policy. We are here to support the export sale of US goods and services,” Saba stated.

“If there are issues with the offshore incorporation of companies or their parents, those issues should be addressed directly in other relevant legislation. These tax issues shouldn't be addressed at the expense of US workers' jobs,” he argued.

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