Oregon Tax Haven bill targets 40 countries

Associated Oregon Industries
Oregon’s largest business advocate

The issue of “tax havens” garnered early interest from the House and Senate Revenue Committees as the Oregon Department of Revenue issued a new report outlining which additional countries should be considered “tax havens” for purposes of Oregon tax law.

AOI testified in opposition to both bills – HB 2099 and SB 61 – primarily due to the inclusion of The Netherlands on the new recommended list of “tax havens.” In addition to The Netherlands, it is widely expected that legislators will see a proposal to add Switzerland to the list. AOI testified in opposition to this potential provision as well.

In 2013, Oregon enacted a tax haven list into law. At the time, the adoption of this list was not opposed by the business community because it was an alternative proposal to a much larger tax increase that was being considered at the time. The new law labels nearly 40 countries as tax havens, and imposes certain taxes over non-U.S. corporations incorporated in these jurisdictions. Oregon is one of four states with this type of legislation.

Oregon’s “tax haven” law affects any corporation that is a member of an affiliated group of corporations filing a federal consolidated tax return that is subject to Oregon’s corporate income tax and has a unitary relationship with a corporation that is incorporated in any one of the countries designated as a “tax haven” by Oregon law.

A corporation meeting this criteria is required to add to federal consolidated taxable income the income of any foreign corporation incorporated in one of these jurisdictions to the extent the foreign corporation is unitary with the corporation required to file in Oregon. That income is apportioned back to Oregon and taxed.

Projections show that Oregon’s ability to tax these foreign entities is adding up to nearly a $50 million/biennium revenue source.

AOI will be opposed to this legislation with the inclusion of The Netherlands and Switzerland on the list. Both countries are two of Europe’s largest economies and significant U.S. trading partners. The U.S. has tax treaties in place with both nations, and both are key sources of direct foreign investment in Oregon. In fact, Switzerland is the third largest source country for foreign-owned enterprise jobs in Oregon, with 3,400 Oregonians being employed by Swiss-owned firms.

This issue is still in its infancy, and AOI will continue to advocate for changes to the proposed legislation.


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