President Trump has announced his simplistic intentions re: tax reform, and the timing is critical although lacking in substantive detail.
Apart from a lower rate (still undecided what that will be), the notion of territoriality is reinforced, in addition to the one-time tax on foreign earnings. The one-time tax is an important part of any legislation, as it will be used to drive the necessary revenues, apart from other provisions, for ultimate passage.
Most importantly, there is a renewed effort by the legislators to undertake discussions with business leaders to better understand the complexity of new legislation and its overall impact on US and global trade. The proposed import / export actions have reinforced a necessity to understand the widespread impact on different industries and the future economic growth limitations.
Realizing there are many moving parts now on Capitol Hill, it is imperative to call attention to those actions that will impact, positively or negatively, a corporation’s future ability to drive economic growth and new jobs.
With the (unexpected) victory for President-elect Trump, coupled with a majority in both the House and Senate, it is highly likely US tax reform is near. There is a close correlation with Trump’s Plan and the Republican’s Blueprint tax reform initiative, although transitional details (Foreign Tax Credits, Earnings & Profits, etc.) still need to be completed. The US tax rate may no longer be one of the highest in the world, and the tax economics of moving business initiatives, and repatriating cash, to the US are welcome thoughts for US based multinationals. However, attention needs to be focused on the details, including Q4 2016 actions that may provide more efficiencies for the expected 2017 US tax reform.
EY’s Global Tax Alert, and the Blueprint are included for reference.