Legislation to Crack Down on Foreign Tax Havens Passes Senate

DENVER, CO – The Senate today approved legislation to crack down on foreign tax havens to help fill the $1 billion budget shortfall created by Congressional Republicans’ budget.

HB25B-1002, sponsored by Senator Matt Ball, D-Denver, would address foreign tax havens, offshore bank accounts, and other tax loopholes for US companies that dodge Colorado taxes with foreign assets.

“In both terms, Donald Trump has given large corporations more leeway to dodge taxes by shifting profits overseas,” Ball said. “Colorado shouldn’t reward that behavior, and this bill makes sure those companies pay their fair share towards Colorado's schools, health care, and roads.”

Unless they can prove legitimate operations in the foreign country, Colorado requires companies incorporated in common tax havens, like Cayman Islands and Panama, to pay Colorado taxes to prevent international tax avoidance. For tax years beginning on or after January 1, 2026, the bill would expand the list of countries to include Hong Kong, the Republic of Ireland, Liechtenstein, the Netherlands, and Singapore.

In 2017, President Trump created a special tax break, now known as the Foreign-Derived Deduction Eligible Income (FDDEI) deduction, for multi-national businesses that kept their intangible assets in the US. HB25B-1002 would decouple the state from the FDDEI to prevent companies from benefiting from larger Colorado tax breaks for investments and assets that are based outside of the state.

HB25B-1002 now moves to the Governor’s desk for his signature.