In response to legislation introduced by Representative Tom Price (R-GA) that would make clear that foreign governments have no authority to tax securities transactions that are between U.S. persons and that occur within the United States, SIFMA released the attached statement of support.
Lofchie Comment: What I find interesting about this is not the tax issue per se, but rather the general question of extra-territorial authority. For example, the EU has recently issued regulations that purport to prevent U.S. persons acting within the United States from entering into short-sale transactions in non-U.S. securities. As I commented in a related news item, this strikes me as an interesting exercise of extra-jurisdictional authority: can a non-U.S. government prohibit a transaction between two U.S. persons even where the subject of the transaction is a security issued by a company based in the jurisdiction of the relevant government? It seems to me that the question of the power to tax is in the same vein: how much authority (whether to prohibit or tax) does a non-U.S. government have as to activities that occur wholly within the United States?
I also note that this is not a one-way street. The U.S. CFTC, by way of example, has asserted authority over derivatives where the parties have a very limited connection to the United States; e.g., where a non-U.S. fund that has a single U.S. investor transacts with a non-U.S. bank.
So, for all of us who work in financial markets, it will be interesting to see whether we are subject, even within the confines of a single jurisdiction, to more than one leviathan.
Click here to view statement of support (links externally to SIFMA website).
I could not find the actual bill introduced by Rep. Price, but will post it when I do find it.