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: Ben Eisen and Daniel Kruger (The Wall Street Journal)
U.S. companies are funneling extra money into their pension funds to take advantage of temporary tax savings, moves that are helping suppress yields on long-term Treasurys. S&P 500 companies are contributing to pension plans this year at a pace expected to nearly match 2017’s level, which at $63 billion was the most since 2003, according to Goldman Sachs Asset Management. Last year’s contributions were spurred in part by companies anticipating changes in the U.S. tax-code overhaul.
By: Allyson Versprille (Bloomberg BNA)
Multinationals like Coca-Cola Co. and private equity firms are concerned that a provision in the new tax law could end up changing the way foreign entities that were meant to be exempted are taxed—potentially putting them in the crosshairs of new U.S. international tax rules. The issue arises from a change in the law that will result in more foreign entities being treated as controlled foreign corporations (CFCs).
By: Alison Bennett, Kaustuv Basu, Terrence Dopp, Toluse Olorunnipa, Catherine Dodge, and Rita Devlin Marier (Bloomberg BNA)
House Ways and Means Committee Chairman Kevin Brady (R-Texas) says tax legislation this year will clarify international tax issues; and President Donald Trump says he wants to cut the corporate rate.
By: Chelsey Dulaney (The Wall Street Journal)
U.S. companies have brought home only a sliver of their more than $2 trillion in profits stashed overseas, a sign that this year’s corporate spending spree on things like buybacks and new equipment is only just beginning.
By: Richard Rubin (The Wall Street Journal)
Multinational companies are trying to beat a new tax called the BEAT. The BEAT is the Base Erosion and Anti-Abuse Tax, a complex minimum tax meant to prevent the world’s biggest corporations from shifting profits from the U.S. to other countries. Turned from idea into law last year as part of the tax-code revamp, the BEAT is now frustrating corporate executives and spurring fresh tax-avoidance strategies.
By: Tatyana Shumsky (The Wall Street Journal)
The era of U.S. companies hoarding cash offshore may be coming to an end as a result of the new U.S. tax law, a development that raises concerns about corporate credit risk for more indebted companies down the line, according to S&P Global Ratings.
By: Courtney Rozen (Bloomberg BNA)
The digital consulting arms of large accounting firms, including the Big Four, are reaping the benefits of tax reform with increased demand for their services. Companies are looking to invest their tax savings in digital transformation consulting. For help, some companies are largely turning to the digital consulting divisions of the Big Four accounting firms.
By: James F. Albertus, Brent Glover, and Oliver Levine
This authors study the effect of corporate tax policy on foreign investment and cash holdings using a dynamic model calibrated to confidential data on the foreign operations of US multinationals. Prior to the 2017 Tax Cut and Jobs Act, the US tax code encouraged excess foreign investment by depressing the opportunity cost of capital. The switch to a territorial system following the reform reduces the optimal level of foreign investment by 9.7% for the average US multinational, despite lowering the tax rate on foreign earnings. The decline in investment is larger for goods producers and firms with less severe agency conflicts.To read more go here
By: Delphine Strauss (Financial Times)
US companies repatriating profits drained more dollars from global markets in the first quarter of the year than did the Federal Reserve’s actions to shrink its balance sheet, according to data that suggests embattled emerging markets cannot simply blame the Fed for their plight.
By: Theo Francis and Ben Leubsdorf (The Wall Street Journal)
Exactly how well is the tax cut working? U.S. economic activity is on a solid trajectory this year, and overall growth is on track for a strong second quarter after a modest slowdown in the early months of 2018. But it remains unclear how much credit goes to the tax law. Both critics and supporters say it will take months or years to draw conclusions on the law’s effect. Meanwhile, here are a dozen gauges that help reveal how well the changes are aiding businesses, workers and the broader economy.
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