This webpage presents a collection of recent articles which address the impact of the Tax Cuts and Jobs Act on U.S. multinational businesses.
By: Josh White
The Tax Cuts and Jobs Act (TCJA) is the most eagerly-awaited tax bill in a generation, with implications for trillions of dollars worldwide. International Tax Review looks at the trends since tax reform came into force.
By: Thomas Gryta (The Wall Street Journal)
America’s biggest companies are reporting some of the strongest earnings growth since the recession, boosted by lowered tax rates and a robust U.S. economy that is fueling demand across industries.
By: Sam Fleming (Financial Times)
The US Treasury has set out details of tax reforms to tackle $3tn worth of corporate earnings hoarded overseas, as it introduces a regime it hopes will boost investment in the country.
By: Lynnley Browning (Bloomberg BNA)
A new international tax that was supposed to deter U.S. technology and pharmaceutical companies from shifting their profits offshore could instead catch Wall Street banks in its crosshairs. The levy on international profits -- called Gilti -- is only supposed to kick in if a company is paying an especially low tax rate in foreign countries. But quirks in the way the tax is calculated mean it will likely hit big banks with offshore operations, even when they already pay effective foreign tax rates above the threshold.
By: Sebastian Beer, Alexander D. Klemm, and Thornton Matheson
This IMF Working Paper describes and tentatively quantifies likely tax spillovers from the U.S. 2017 corporate income tax reform. It calculates effective tax rates under various assumptions, and tentatively estimates that under constant policies elsewhere, the rate cut will reduce tax revenue from multinationals in other countries by on average 1.6 to 5.2 percent. If other countries react in line with historical reaction functions, the revenue loss from multinationals rises to an average of 4.5 to 13.5 percent. The paper also discusses profit-shifting, real location, and policy reactions from the more complex features of the reform.To read more go here
By: Juan Carlos Suarez Serrato
This paper shows that eliminating firms' access to tax havens has unintended consequences for economic growth. The authors analyze a policy change that limited profit shifting for US multinationals, and show that the reform raised the effective cost of investing in the US. Exposed firms respond by reducing global investment and shifting investment abroad - which lowered their domestic investment by 38% - and by reducing domestic employment by 1.0 million jobs. The authors then show that the costs of eliminating tax havens are persistent and geographically concentrated, as more exposed local labor markets experience declines in employment and income growth for over 15 years. This paper discusses the implications of these results for other efforts to limit profit shifting, including new taxes on intangible income in the Tax Cuts and Jobs Act of 2017.To read more go here
By: Amanda Iacone (Bloomberg BNA)
U.S. companies are expected to pay billions in federal taxes to bring back cash they've built up overseas over the last three decades. But investors might not know it by reading their financial statements. Analysts told Bloomberg Tax that the ambiguity starts with where in their annual or quarterly reports companies are reporting the repatriation tax.
By: Ben Leubsdorf and Richard Rubin (The Wall Street Journal)
Corporations taking advantage of new, lower tax rates reduced their payments to the federal government last month. The Treasury Department on Thursday said government receipts fell 7% in June compared with the same month a year earlier, including a 33% drop in gross corporate taxes.
By: Andrew Edgecliffe-Johnson (Financial Times)
Stock buyback announcements by US companies smashed records in the second quarter, feeding the debate over how boardrooms are spending their windfall from the Republican tax cuts President Donald Trump signed into law in December.
By: Mindy Herzfeld
The global intangible low-taxed income provision — new section 951A, combined with new section 250 — in the Tax Cuts and Jobs Act (P.L. 115-97) includes rules unlike any that have ever been part of the Internal Revenue Code. Tax advisers and reg writers have been wrestling with concepts that eliminate deferral on any foreign earnings over a fixed return on tangible assets, separate GILTI taxes into their own basket, allow a GILTI deduction at the parent level, and net controlled foreign corporations that have positive tested income with those that have negative tested income. Many of those concepts can be traced to international tax reform proposals that have been discussed for over a decade. Review and analysis of the earlier proposals could help inform both advisers and regulation writers.
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