Sanctioned Russian oligarchs and U.S. companies that pay taxes to Moscow would lose some of their American tax benefits under a new bill authored by two senators.
The legislation, sponsored by Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, and Sen. Rob Portman, an Ohio Republican, would deny tax credits and deductions to companies that continue to operate in Russia and Belarus, according to a draft released Thursday. The bill is the latest effort in Congress to punish Russian President Vladimir Putin and his allies for the invasion of Ukraine.
“If companies choose to keep 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 in the United States,” Wyden and Portman said in a statement. “Russian oligarchs and companies supporting Putin also shouldn’t be getting tax benefits in the United States.”
The bill would add Russia and Belarus to an existing list of countries — North Korea, Iran, Syria, and Sudan — where corporations are ineligible for foreign tax credits. Companies would also not be allowed to deduct any taxes paid in those two countries.
The legislation would alter a key feature in the tax code that allows global companies to lower their U.S. tax bill based on the levies they pay to foreign governments.
Sanctioned individuals, or others identified as participating in the invasion of Ukraine or having ties to a Russian company would also lose any U.S. tax benefits.
The draft bill is a warning signal to companies still operating in Russia, including Koch Industries Inc. and International Paper Co., that they could face tax increases. More than
The proposal comes as Congress and the White House have taken a series of steps to impose sanctions and take other economic measures to hamper Russia’s economy as its military forces continue the invasion of Ukraine.
The U.S. has banned the imports of some Russian goods, including seafood and alcohol. Legislation to ban the import of Russian energy products and to make the country a trade pariah has been stalled in the Senate, though lawmakers are optimistic the measure could get a vote in the coming days.
Wyden has said he hopes to pursue the package denying tax breaks to companies operating in Russia as soon as the trade legislation clears the Senate.
