Tuesday, August 16, 2022
Reuven Avi-Yonah (Michigan; Google Scholar) & Bret Wells (Houston; Google Scholar), Pillar 2 and the Corporate AMT, 176 Tax Notes Fed. 953 (Aug. 8, 2022):
In this article, Avi-Yonah and Wells argue that the corporate alternative minimum tax proposed in the Inflation Reduction Act of 2022 would put the United States in a better position than current law, and arguably even better than would a tax reform package that included a conforming global intangible low-taxed income regime but no book-based corporate minimum tax.
Overall, the adoption of the CAMT by the United States should result in the same 15 percent being paid by U.S. MNEs that are subject to it (as well as by foreign MNEs investing into the United States), but more of that revenue should be paid to the United States on both foreign and domestic income than under current law. Moreover, the CAMT could result in more revenue to the United States than even a tax reform package that includes a reformed GILTI but no CAMT, because a reformed GILTI covers only foreign income whereas the CAMT should shield both foreign and domestic income from taxation by other countries that adopt pillar 2. However, the ability to then use U.S. CAMT credits in later years to reduce regular taxable income of the U.S. person could in turn cause the U.S. jurisdictional tax to fall below 15 percent in light of cross-crediting use of U.S. CAMT credits against regular taxable income. Treasury should ensure that taxpayers have the flexibility to not be required to claim CAMT credits if doing so would subject them to qualifying UTPR or qualifying IIR regimes.