Dear Secretary Lew:

Business Roundtable appreciates the opportunity it has had since our letter to you of May 30, 2014, to discuss with U.S. Treasury and OECD officials the OECD's Base Erosion and Profit Shifting (BEPS) project.  As you are aware, the U.S. business community has been particularly concerned that the BEPS project risks increasing costs, uncertainty, and barriers to trade and investment such as duplicative taxation.  As you review the 2014 deliverables and work commences on the remaining items, we urge you to keep foremost in mind that economic growth and broadly-shared prosperity flow from eliminating barriers to trade and investment and avoiding the creation of new barriers.

We particularly appreciate the Treasury's willingness to listen to the concerns of the business community regarding key issues in the 2014 deliverables - especially significant compliance costs and risk of disclosure of proprietary information.  We also appreciate the feedback the OECD has provided and its willingness to consider the business community's concerns.  We believe business input is critical to an understanding of the real world impact of the various proposals and to ensuring the project does not lead to barriers to trade and investment that would be harmful to economic growth and job creation.

The Roundtable is aware that some of the more contentious issues of 2014 have been reserved and that these and a number of other contentious issues remain to be addressed in 2015.  These issues present the same challenges for the business community and again risk double taxation, increased compliance costs, and the disclosure of proprietary operating information to competitors, all of which result in greater uncertainty and lower returns to cross-border business investment.  We believe the risks are particularly significant for the U.S. business community and, therefore, for the U.S. Treasury.

To increase the likelihood of success, the Roundtable believes it is essential that:

• The items addressed are properly scoped when the work commences.
• There is a focus on improving dispute resolution mechanisms and obtaining adherence to them by all participants.  Better dispute resolution mechanisms are not a panacea, however; the best dispute resolution is clear rules that prevent disputes from occurring.
• The release of company specific information provided under country by country reporting is controlled under treaty arrangements to maintain its confidentiality.
• Countries commit to roll back actions they have taken that are inconsistent with the consensus achieved.

Finally, the Treasury must bear in mind that the U.S. tax system with its singularly high rate and worldwide system is badly out of line with international norms.  We agree wholeheartedly with your view that the United States must reform its business tax rules.  Tax reform with lower corporate rates and modernized international tax rules is essential for boosting U.S. economic growth and job creation.  Until reform occurs, however, our high rate and worldwide system mean that measures aimed at restricting base erosion - e.g., limits on deductions or income inclusions - will have a disproportionate adverse impact on U.S.-based companies and U.S. operations, thereby having a potentially far greater negative impact on the U.S. economy, investment, and jobs.

Sincerely,

Louis R. Chênevert
Chairman& Chief Executive Officer
United Technologies Corporation
Chair, Tax and Fiscal Policy Committee
Business Roundtable