Obama clamps down on offshore tax avoidance

WASHINGTON: President Barack Obama proposed to raise about $190 billion over the next decade by outlawing three offshore tax-avoidance techniques used by US companies such as Caterpillar Inc and Procter & Gamble Co. He also would make it riskier for Americans to stash money in tax-haven banks.

The tax system is ���full of corporate loopholes,��� Obama said at the White House, as he outlined the plan along with Treasury Secretary Timothy Geithner. The tax proposals, which will be part of a detailed budget the administration releases later this week, would raise a total of about $210 billion over the next decade.

Obama is going after a strategy that allows US-based multinational companies to effectively hide from the Internal Revenue Service the role their foreign subsidiaries play in shifting profits into low-tax jurisdictions such as the Cayman Islands, according to the administration.

The proposal, affecting tax rules known as ���check the box,��� would net $86.5 billion in revenue between 2011-2019 by overhauling regulations created in Democrat Bill Clinton���s administration and later written into law by a Republican-controlled Congress after Clinton tried to withdraw the rules.

The proposal, combined with a $60.1 billion plan to limit many expense deductions for American companies that take advantage of laws allowing them to defer tax on foreign profits and a $43 billion crackdown on abusive foreign tax credits, would be the biggest tax increase on US corporations since 1986.

Obama also would shift the burden of proof to individuals when the IRS alleges assets are being hidden in certain offshore bank accounts, the White House said in a statement.

���This is bad stuff,��� Kenneth Kies, a tax lobbyist at the Washington firm Federal Policy Group, said of Obama���s plans. ���This is going to be the biggest fight for the corporate community in the next two years.��� Kies represents GE, Anheuser-Busch Cos and Microsoft.