Senate Finance Committee Chair Ron Wyden (D-Ore.) and committee member Rob Portman (R-Ohio) introduced legislation on Thursday that would bar foreign tax credits for companies 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 U.S. taxes, the Internal Revenue Service generally allows a person to either claim an itemized deduction or credit.
Wyden and Portman’s legislation could change that for companies operating in Russia and Belarus, the latest measure seeking to ramp up financial pressure on Moscow and its ally amid 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. These are simple propositions.”
The discussion draft of the legislation would also impose the full 21 percent corporate tax rate for income earned from Russia and Belarus “and any losses from that country cannot be used to offset other income earned as global intangible low-taxed income,” according to a summary of the legislation.
The legislation also removes a slew of tax benefits, including tax treaty benefits and certain exemptions, to Russian officials and Kremlin allies who have been sanctioned by the U.S. over the war in Ukraine.
“The tax code already disallows lower tax rates and foreign tax credits for companies paying taxes to countries with rogue regimes,” the senators wrote. “Our commonsense proposal simply adds Russia and Belarus to that list.”
Many companies have already halted operations or pulled out of Russia in response to the conflict, with notable exceptions including Koch Industries and some Papa Johns franchises.
The Senate on Thursday unanimously passed a package to end normal trade relations with Russia and Belarus and codify the administration’s ban on Russian oil imports.