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Report: EU finance chiefs say US tax plans may breach treaties, harm trade

The U.S. could breach some of its international obligations and harm trade if proposed tax reforms are enacted, finance ministers from five major European economies warned, the Associated Press reported.

The finance ministers of France, Germany, Italy, Spain and the U.K. wrote in a letter to U.S. Secretary of the Treasury Steven Mnuchin that some of the provisions of the tax proposals in Congress "could contravene the U.S.'s double taxation treaties and may risk having a major distortive impact on international trade."

According to the report, the ministers had "significant concerns" about the tax plans, specifically the proposal on the so-called base erosion and anti-abuse tax, which the ministers fear could hurt genuine commercial deals and "extremely" harm international banking and insurance businesses in particular.

The ministers claimed the measure "may lead to significant tax charges and may harmfully distort international financial markets," the Associated Press report said.

In a 51-49 vote earlier this month, the U.S. Senate passed a sweeping tax bill that would lower the corporate rate to 20% from 35%, overhaul international business tax rules and temporarily lower individual taxes. The House passed a similar measure earlier and lawmakers must now work to reconcile the two versions before voting again and sending the merged bill to President Donald Trump.

The Treasury Department's analysis of the Senate tax bill forecasts an increase in tax revenues of $1.8 trillion during a 10-year window.