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Obama pledges a crackdown on tax loopholes

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Obama pledges a crackdown on tax loopholes

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US President Barack Obama has vowed to overhaul his country’s tax policies that he says reward companies for shifting US jobs overseas.

Obama said the current legislation also makes it too easy for wealthy citizens to evade taxes by salting money away in offshore accounts. “And that is why today I am announcing a set of proposals to crack down on illegal overseas tax evasion, close loopholes and make it more profitable for countries to create jobs here in the United States,’‘ the US president said. Under the Obama plan, companies would no longer be able to deduct expenses for their overseas operations until they have paid tax on their profits. It would also prevent firms claiming big deductions by inflating the amount of foreign tax they have paid. The White House estimates the plan will save 179 billion euros per year, however there is opposition from some of the big multinationals. There are also separate proposals to crack down on overseas tax havens like the Cayman Islands. Foreign institutions will be obliged to register with the US tax authorities — otherwise it will be assumed they are helping individuals evade taxes. Officials say an estimated 70 billion euros could be clawed back this way.