Individuals and entities located outside of the United States should be aware that the House Ways and Means Committee Chairman, along with every Ways and Means Committee Republican, has introduced a legislative bill that proposes to impose additional tax on U.S. income of individuals and entities in certain foreign jurisdictions that impose a “discriminatory or extraterritorial tax”. In particular, this tax appears to be targeted at jurisdictions that have enacted a tax such as an undertaxed payments rule (UTPR) or a digital services tax (DST). According to the House Ways and Means Committee Chairman, the introduction of this bill is intended to reinforce a new U.S. executive order to inform the Organization for Economic Cooperation and Development (OECD) that any commitments made by the previous administration to its two-pillar approach “have no force or effect” in the United States.
The Canadian Parliament enacted a DST in 2024, and the Canadian government has released draft legislation that would apply a UTPR as of December 31, 2024.
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