Their letter has been made public in the week that the OECD’s 2015 international tax conference o BEPS takes place in the US capital.

The two Republican senators, Orrin Hatch who heads up the Senate Finance Committee, and Paul Ryan who chairs the House Ways and Means Committee, state they are ‘troubled by some positions the Treasury department appears to be agreeing to as part of this project’. 

One example cited in the letter concerns proposed changes to the country-by-country reporting standards, which the senators claim will contain ‘sensitive information related to a US multinational’s group operations’. 

The letter goes on to say: ‘We are also concerned that Treasury has appeared to agree that foreign governments will be able to collect the so-called “master file” information directly from US multinationals without any assurances of confidentiality or that the information collection is needed.’

‘The master file contains information well beyond what could be obtained in public filings and that is even more sensitive for privately-held multinational companies.  We are also concerned about interest-deductibility limitation proposals on the basis of questionable empirics and metrics.’

The letter questions whether the Treasury department has the necessary authority in law to require country-by-country reporting, which it describes as ‘questionable’. It also says ‘the benefits to the US government from agreeing to these new reporting requirements are unclear, particularly since the IRS already has access to much of this information to administer US tax laws’. 

Hatch and Ryan state that before any final decisions are made relating to the collection of country-by-country information, the Treasury and the Internal Revenue Service (IRS) should outline how any information obtained from foreign multinationals operating in the US will be utilised, and explain the justification for agreeing that sensitive master file information on US multinationals can be collected directly by foreign governments. 

Their letter warns: ‘In the event we do not receive such information, Congress will consider whether to take action to prevent the collection of the country-by-country and master file information’.

The letter also flags up ‘significant concerns’ about other BEPS proposals, including  modifying the permanent establishment (PE) rules, using subjective general anti-abuse rules (GAAR) in tax treaties, and collecting sensitive data from US companies to analyse and measure BEPS.

The senators warn: ‘Congress is tasked with writing the tax laws of the US, including those associated with cross-border activities of US companies.

'Regardless of what the Treasury Department agrees to as part of the BEPS project, Congress will craft the tax rules that it believes work best for US companies and the US economy. 

‘Close consultation between Congress and the Treasury Department should inform the BEPS discussions.  We expect that as we move forward on US tax reform, US tax policy will not be constrained by any concessions to other nations in the BEPS project to which Congress has not agreed.’

Hatch and Ryan conclude by reminding the Treasury department that it has the ability to refrain from signing on to the BEPS final reports.

They state: ‘Many of the OECD’s BEPS project objectives are sound, and international cooperation – as well as competition – in tax policies is desirable.  We trust that you agree, however, that precipitous decisions to impose constraints on US tax policy and added burdens on US companies, especially on the basis of weak empirics and metrics, are not desirable.’

The letter is here

Details of the OECD 2015 international tax conference are here