The effect of recent US tax reforms (Tax Cuts & Jobs Act) is an area of significant interest but also a source of confusion among foreign businesses and private investors, but also US expatriates abroad.
Ted Markson, partner at Golenbock Eiseman Assor Bell & Paskoe in New York, outlined at the recent Alliott Group EMEA Regional Conference in Prague, that the big headline story of the U.S. tax reform program (Tax Cuts & Jobs Act) is the reduction in the rate of US corporate tax from 35% to 21%. According to Markson, with corporation tax set previously at 35%, structures would tend to be used for international investment into the United States that would lower the effective corporate tax rate.
In Markson's view, the new tax laws mean that we are now dealing with a number of moving parts: "First of all, we have the change to the rate of tax applied to a corporation doing business in the U.S. But also, we are seeing changes to the ability of U.S. corporations to use some of the conventional strategies to reduce or offset their taxable income."
While there is a lower tax rate, Markson commented that there are now perhaps fewer options to reduce the taxable income to which that rate is applied. Added to this, the way in which flow-through income from a non-corporate business is taxed in the U.S. is also changing.
The combination of these changes is, according to Markson, tricky to gauge and slightly abstract at the current time. Markson's firm is starting to look into how the new laws impact particular investments into the United States: "It requires new analyses because some of the structures that would have been routinely advised in the past may no longer be applicable."
Read the full article at https://www.alliottgroup.net/practice-management-resources-for-owner-managed-firms/impact-us-tax-reform-on-foreign-businesses-and-nationals/ to find out more about, inter alia, the impact from the perspective of investment structures, how it may affect the amount of corporate taxable income that can be offset using interest deductions, and the way the U.S. may treat flow-through taxation.
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