Strategizing Multinational Tax Risks

As Final Regulations are in process, TEI’s practical and thoughtful comments were submitted re: the proposed Section 250 Regulations.  A copy of the comments are provided for reference, with highlights including:

• Determination of domestic and foreign use are impractical rules for which a multinational company will find difficult to effectively implement.  A seller’s shipping address would be an alternative solution
• Long-term supply contracts may be difficult to obtain new documentation annually, thus such documentation of the initial contract should suffice
• Business Service provisions have rules that will prove difficult to obtain, workable rules should be designed and implemented
• Effective date of the final regulations should be tax years beginning at least one year after the date of publication, to allow time for system changes
• Final section 250 regulations should provide that the exploitation of manufacturing and supply chain IP is a foreign used service, consumed at the place of manufacture, if it meets the physical transformation and proximity requirements outlined in the regulations
• Advance payments of section 451 are to be related to the timing for related cost of goods sold amounts to prevent distortion

• Final regulations clarify where the charitable contribution deduction limitation fits in the ordering rule, along with sections 163(j), 172, and 250.

• Prop. Treas. Reg. § 1.250(b)-1(d)(2) provides that the exclusive apportionment rules in Treas. Reg. § 1.861–17(b) do not apply, this provision is a disincentive and should be changed

   

  TEI’s comments are informative, especially due to the inclusion of suggested alternatives to the proposed rules and therefore worth reviewing.   

  Click to access tei_comments_-_proposed_section_250_regulations_-_final_to_irs_treasury_6_may_2019.pdf