Tuesday, October 12, 2021

Senators Ask Yellen For Details On Global Tax Treaty Bypass?

According to Law360Top Senate Republicans on three committees want details on how President Joe Biden's administration could bypass the tax treaty process to reallocate U.S. taxing rights as part of a global minimum tax agreement, according to a letter dated October 8, 2021.

U.S. Treasury Secretary Janet Yellen should explain by Oct. 15 how the Biden administration proposes to enact the Organization for Economic Cooperation and Development's so-called Pillar One proposal without the tax treaty process, the senators wrote.

The letter was sent by Republican Sens. Pat Toomey of Pennsylvania and Mike Crapo and James Risch of Idaho. Toomey is the ranking member of the Senate Banking Committee, while Crapo serves as top Republican on the Finance Committee and Risch is the ranking member of the Senate Foreign Relations Committee.

Pillar One, which would reallocate taxing rights to countries where companies have customers but no physical presence, would require changes to U.S. tax law that must go through the Senate's tax treaty process, which requires a vote with two-thirds approval, the senators said. 

"We are especially concerned, given Treasury has failed to meaningfully consult our members on the potential treaty or legislative action that would be necessary to fully carry out the Pillar One agreement," the senators said.

They added that Republicans on the Foreign Relations Committee, which has jurisdiction over tax treaties, have received no correspondence from the Biden administration, according to the letter.

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