Iraq Added to Treasury List of Boycotting Countries
The Department of the Treasury on Aug. 13 added Iraq to its list of countries which require or may require participation in, or cooperation with, an international boycott. The current list now includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and Yemen.
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As a result of Iraq’s addition to the list, all U.S. businesses and their foreign affiliates or parents operating in or with entities in Iraq will now need to report annually their Iraqi operations to the Internal Revenue Service, regardless of their awareness of actual Arab League Boycott (ALB) enforcement, said a Treasury Department spokesman. Before Iraq was listed, U.S. companies operating in Iraq or with Iraqi companies were only required to report their operations to the IRS annually if they actually had received an official ALB request or were aware of an official ALB request to another company.
Sanctions for violating Treasury’s antiboycott regulations include denial of tax benefits such as foreign tax credit and foreign subsidiary deferral benefits. If the U.S. taxpayer has no such tax benefits, there is no sanction, but the U.S. taxpayer still has to report annually. Failure to report can subject the taxpayer to fines and criminal proceedings.