#23.11 [english]: Proposed Legislation – U.S. retaliation against (German?) extraterritorial taxation

Episode von TAXpod von Jens Schönfeld / Goetz Kempelmann · 19. Juli 2023 · 35 min

In this TAXpod episode, we discuss upcoming U.S. legislation under the “Defending American Jobs and Investment Act” and the proposed section 899. Our special guest is Loren Ponds, partner with Miller & Chevalier in Washington D.C., who is guiding us through the announced changes. The proposed sec. 899 introduces increased tax rates (up to 20%) on companies with business in the U.S. which are headquartered in countries that impose extraterritorial or discriminatory taxes, and is meant to be a retaliatory measure against such countries. With the proposed rule, the U.S.A. target some country’s “Undertaxed Profits Rules”, “Digital Services Taxes” and – this being the reason for addressing this issue in a German podcast –   presumably Sec. 49 of the German Income Tax Act. As a result, the application of Sec. 49 could have a much wider impact – even on taxpayers who have nothing to do with Sec. 49 – than was generally expected in Germany. It should not be underestimated that the USA is not only a defensible democracy, but also a defensible tax juristdiction that will prevent extraterritorial taxation, if necessary without shying away from confrontation… Enjoy listening!

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