Senate Finance Committee Chairman Ron Wyden (D-Ore.) and committee member Rob Portman (R-Ohio) on Thursday introduced a bill banning foreign tax credits for businesses that pay income taxes to Russia and Belarus.
In situations where entities or individuals have paid foreign taxes abroad and are also responsible for paying US taxes, the Internal Revenue Service generally allows a person to claim an itemized deduction or credit.
Wyden and Portman’s legislation could change that for companies operating in Russia and Belarus, the latest move aimed at increasing financial pressure on Moscow and its ally amid the invasion of Ukraine.
“If companies choose to continue doing business in Russia and paying taxes to Putin’s government in the face of these atrocities, they should forfeit their foreign tax credits and deductions for taxes paid to Russia to the states United,” Wyden and Portman said in a statement. .
“Russian oligarchs and companies supporting Putin should also not receive tax advantages in the United States. These are simple suggestions.
The bill for discussion would also impose the full corporate tax rate of 21% for income earned in Russia and Belarus “and any loss from that country cannot be used to offset other income earned as low-taxed global intangible income,” according to a summary of the legislation.
The legislation also removes a host of tax benefits, including tax treaty benefits and certain exemptions, for Russian officials and Kremlin allies who have been sanctioned by the United States for the war in Ukraine.
“The tax code already prohibits lower tax rates and foreign tax credits for companies that pay taxes in countries with rogue regimes,” the senators wrote. “Our common sense proposal simply adds Russia and Belarus to this list.”
Many companies have already halted operations or pulled out of Russia in response to the conflict, with some notable exceptions including Koch Industries and some Papa Johns franchises.
The Senate on Thursday unanimously passed a package aimed at ending normal trade relations with Russia and Belarus and codifying the administration’s ban on Russian oil imports.