Paul L. Caron

Tuesday, December 3, 2019

Treasury Eases Minimum-Tax Burdens On U.S. Multinationals

IR-2019-194, Treasury, IRS Issue Final Regulations on New International Provision, the Base Erosion and Anti-Abuse Tax (Dec. 2, 2019)

IR-2019-193, Treasury, IRS Issue Final Regulations on the Foreign Tax Credit (Dec. 2, 2019)

Wall Street Journal, Treasury Eases Minimum-Tax Burdens on U.S. Multinationals:

U.S.-based multinationals will be less exposed to certain U.S. taxes after the Treasury Department issued new rules implementing two major pieces of the 2017 tax law.

The regulations, unveiled on Monday, will help ease the burden of two separate minimum taxes that were designed to put a floor under corporate tax collections. ...

One minimum tax affected by the regulations is the Global Intangible Low-Taxed Income tax, or GILTI, which affects U.S.-based companies with foreign operations. It was designed to limit companies’ ability to book profits in low-tax jurisdictions without paying U.S. taxes and was projected to raise $112 billion over a decade. The rule issued Monday includes a provision that would allow companies to treat certain assets as 50% exempt for expense allocation purposes under GILTI, a senior Treasury official said.

Treasury officials also proposed more generous rules for calculating foreign tax credits, including changes to the allocation and apportionment of research and experimental tax deductions. The Treasury official said the change will generally allow those subject to the GILTI tax to increase their use of foreign tax credits, helping companies that conduct research and development in the U.S.

The second minimum tax is known as the Base Erosion and Anti-Abuse Tax, which makes it harder for companies to load up their U.S. operations with deductions and push profits to related entities abroad. The tax was projected to raise $150 billion over a decade.

Accounting Today, IRS and Treasury Issue Final Rules on Foreign Tax Credit and BEAT

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