U.S. bill proposes additional tax on foreign jurisdictions

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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