Carol Doran Klein
Vice president and international tax counsel, United States Council for International Business (USCIB)
Carol Doran Klein is USCIB’s international tax counsel, managing the work of the Taxation Committee and representing member views on tax policies and initiatives to the US government and in various international forums.
The USCIB Tax Committee’s stated objective is: “to enhance the competitiveness of US business by promoting sound, appropriate and consistent international tax policy at home and abroad; eliminate obstacles to international trade and investment in US tax legislation and regulations; prevent and eliminate government policies and practices that result in double taxation”.
Founded in 1945 to promote an open world trading system, the USCIB now describes itself as “among the premier pro-trade, pro-market liberalisation organisations” and has a membership base of more than 300 multinational companies. The organisation serves as the US affiliate of the International Chamber of Commerce and the Business and Industry Advisory Committee to the OECD.
In a year that has seen large multilateral moves to tackle base erosion and profit shifting, Doran Klein has had her plate full in ensuring the concerns of US businesses are heard. And with multiple action items on the OECD’s BEPS Action Plan scheduled for completion in 2014, her influence will continue to be critical if the views of US business are to be heard in this international context.
Here, she talks about her achievements from the past year, and reveals her one step plan to solving the BEPS conundrum.
International Tax Review: What do you consider to be your biggest achievement in, or influence on, taxation?
Carol Doran Klein: The most important thing that I do is to make our member companies aware of what is going on internationally (at the OECD, the UN and elsewhere) and provide them a forum for developing a response and providing input into those organisations. This is an ongoing process. I believe consistent input, particularly factual input on how business operates, can help decision-makers make better decisions.
ITR: When it comes to documentation and related compliance issues, you have said that compliance requirements ought to be balanced against the burden to the taxpayer and benefits to the government. Is this balance being satisfied at present?
CDK: I think there is a real risk that the efforts to improve documentation will result in an increased compliance burden. The OECD acknowledges that they do not have the ability to mandate documentation requirements. So, if the OECD suggests new documentation, there is no guarantee that the new documentation will not be in addition to, instead of in lieu of, the old documentation.
ITR: If you had one message for the US government, what would it be?
CDK: Please be principled. There is enormous pressure, particularly in the BEPS project, to find ways to impose tax on low-taxed corporate earnings. If the countries do not have a principled basis for imposing tax then it becomes more likely that countries may assert multiple inconsistent bases for imposing tax, which would inevitably lead to double or multiple taxation, which would be a dampener on foreign direct investment.
ITR: Is it that providing consistency is more important than trying to find the perfect-fit solution when it comes to tax policy?
CDK: Consistency is very important to business because it permits business to anticipate the return on its investment and make investment decisions based on those anticipated returns. Obviously, anticipated returns are not always realised, but if tax is a significant cost and it is a question mark, then making sound business decisions is much more difficult, so of course consistency is important.
I also don’t believe in perfect-fit solutions. The world is far too complex for policymakers to design perfect-fit solutions. There will always be cases that were not considered and, therefore, do not fit into the “perfect-fit solutions”.
ITR: If you could change one thing about US or international corporate taxation overnight, what would it be?
CDK: I think the BEPS issues would vanish if the corporate and shareholder tax could be integrated. That is the correct answer in theory: one level of tax imposed on individuals, at the individual rate. Unfortunately, I think this is a holy grail because it is extremely complex and is very difficult from a political perspective because you are taxing individuals on funds they are not currently receiving. But in theory, if you want to tax each thing once and not more than once, then taxing the individual shareholder currently on corporate earnings is the correct answer.
ITR: On the international front, I have heard you talk previously of the need for greater interaction and cooperation between and among national authorities - for example through a global forum of competent authorities. Would this be one area for improvement in your mind?
CDK: I think the OECD is making steps in this direction, so let’s see how this goes.
ITR: What does USCIB hope to achieve within the next 12 months? And what will be an indicator of success in that pursuit?
CDK: I think my goal in the USCIB Tax Committee is to make sure the decision-makers at the OECD and elsewhere have the information from business that they need to make principled decisions in moving forward on BEPS and other projects. I think we will be able to see if that happens if the work product coming out of the BEPS project reflects the way business is done.
The Global Tax 50 2013