The Republican-led US Congress convened yesterday with competing fiscal plans presented by both parties.

And Bermuda looks likely to be caught up in partisan skirmishes with US Democrat, Richard Neal, saying that the first bill he will file in the new congress will be legislation dubbed the “Bermuda Bill,” which would prevent US corporate inversions offshore.

‘'The practice of reincorporating in a foreign country to avoid paying US income tax is inconsistent with American corporate citizenship,'' Neal said last month.

And the incoming Republican leader of the Senate Finance Committee, Charles Grassley, also pledged to revive patriot tax moves which caused heavy debate in the last Congress. The Wall Street Journal said Sen. Grassley is expected to attach legislation barring so-called corporate inversions to President Bush's plans to stimulate the economy with heavy tax cuts, including the removal of income tax on dividends.

In the last Congress, Sen. Grassley and his Democratic counterpart, Sen. Max Baucus, attempted to pass legislation ending the practice of US companies moving their headquarters to Bermuda while maintaining their main operations in the US.

Sen. Grassley's measure, the Reversing the Expatriation of Profits Offshore Act (or REPO for short), would require US companies reincorporating overseas to pay US taxes if they have substantially the same assets and more than 80 percent of the same shareholders as before.

The Grassley bill would yield an extra $2.2 billion in corporate taxes over ten years, according to a congressional estimate.

US companies move offshore largely because the US tax code requires US corporations to pay corporation tax on its world-wide income.

US corporations therefore commonly undertake corporate inversions so that their foreign operations will not be subject to US tax on the income in addition to the tax imposed by the country where the operations are located.

Opponents of corporate inversion bills say that the US tax code remains widely out of step with other OECD countries, the majority of which have instituted reform and reduced corporation tax levels.

The US now has the fourth highest corporate income tax rate in the OECD and critics such as William A. Woods, former chief executive of the Bermuda Stock Exchange, have argued that the US economy would benefit more from changes to the US tax code, than the elimination of offshore tax loopholes.

Bill Thomas, the powerful chairman of the Ways and Means Committee in the House of Representatives, agrees and is expected to bring a wide ranging series of tax reforms before Congress this year.