US excise tax proposal invites retaliation, UK tax professionals say

A US excise tax on payments to related foreign corporations is a hostile measure that may violate bilateral tax treaties and prompt retaliation, UK tax professionals warned, as they presented their initial assessment of the Tax Cuts and Jobs Act.

“It does seem to be a very interesting move by revenue authorities to build a kind of firewall within a jurisdiction, to say that you can only have a deduction to the extent that there’s a corresponding taxable amount in that jurisdiction,” said John Kilby, head of tax at Canary Wharf Group plc. “You could argue that it’s very clever of the [US] administration because it could force more jobs back to the US.”

Kilby was addressing participants at a November 6 conference on U.S. tax reform at the London office of Herbert Smith Freehills LLP. Sponsors included Tax Analysts and Sharp Partners P.A. Read more:

My news story for Tax Analysts, November 8 ($)

[Here’s an update from Jonathan Curry (free to view), published November 9.]