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Episode 16: Post-Election Check-in: A New Global Corporate Minimum? (Part 3)




Announcer: Welcome to this episode of “60-second Retail” - a BDO podcast keeping you in-the-know on events and trends in retail and consumer products industry impacting your bottom line, in just a few short minutes.

Natalie: Hello, my name is Natalie Kotlyar. I am the National Leader of the Retail and Consumer Products industry group at BDO USA. Welcome to our podcast. In this episode we're speaking with John Marquardt, National Tax Leader for the Retail and Consumer Products Industry Group at BDO.

We're here to discuss a proposal for a new alternative corporate minimum tax based on global book income and the impact that this will have on retailers.

Welcome John and tell us how should retailers consider the new corporate minimum tax impact on their business?

John: Thanks Natalie for having me back again. This is a great topic, so I really appreciate you bringing it up. You know prior to 2018, we had a corporate minimum tax in the United States – it was repealed and it's no longer in place under current tax law.

One proposal that the tax community is hearing about under the incoming administration, is bringing back some form of this minimum tax. But this time, very interestingly, with a global focus. So not just focused on the US results, but the global results of the company.

Think about it is something like a 15%, give or take, minimum tax on global book income. This could be very significant for US based retailers, as they may be generating book losses in the United States and they may still have book income in some foreign countries, and when you offset all of that and edit together, you could still end up with book income, but yet tax losses.

You know the original corporate minimum tax in the United States was put in place long ago as a stopgap on larger US companies that showed book income, but no taxable income. Very different measuring sticks there, so the same concept applies here.

This time they're looking to book the global book income, which could be impactful and something that our US based multinational retailers really ought to get ahead of. Start modeling that out now, think about what the impact on their cash flows could be as we get into 2021 and beyond.

So, keep an eye on this. Keep a look out for it. It's not law yet, obviously, but it's something that's being talked about.

Natalie: Thank you John. I mean this potentially has a significant impact on retailers, especially those that are looking to go global or are already global. Thank you for that insight and thank you for joining us today.

Announcer: And that concludes this episode of BDO’s “60-second Retail” podcast.  Don’t forget to tune in for the next episode!  To find more information on our hosts, guests, BDO’s services, or listen to previous episodes of “60-second Retail”, please visit www.bdo.com/60-second-retail.
 

 
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