Changing International Tax Landscape

October 2017

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Finance executives of U.S. multinational organizations (“MNEs”) should review how the interplay of the following initiatives can impact them: (i) U.S. tax reform’s international legislation; (ii) the OECD’s BEPS initiative; and (iii) Brexit.
 

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1. How does the interplay of these three initiatives impact: 

  • Tax profile
  • Treasury options
  • Supply chain
  • Corporate structure
 
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2. What areas should be vetted? 

  • Identify tax efficient repatriation options.
  • Maximize foreign tax credits and after tax cash balances.
  • Navigate the potential “one-time tax” on foreign earnings under certain U.S. tax reform proposals.
  • Rework EU structures to mitigate IP, finance and supply chain challenges, as well as potential local exit and withholding taxes.
  • Evaluate overall impact on tax and financial disclosures.
 
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3. What tax attributes should be reviewed? 

  • Locate sources and calculate earnings and profits (“E&P”).
  • Calculate foreign tax pools.
  • Analyze foreign subsidiary share basis and fair market value.
 
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4. What are the key areas of planning considerations?

  • Holding company structures
  • Intellectual property situs
  • Tax attribute utilization
  • Supply chain modification
 
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5. Next steps? 

  • ​Review common denominators to evaluate alternatives (i.e., assess inventory of cash, including “trapped” cash; firm up E&P and associated foreign tax pools; analyze share and asset tax basis).
  • Reduce or harvest tax attributes as appropriate.
  • Model practical options for repatriation of foreign earnings.
  • Identify practical changes to the supply chain that balance the U.S. tax reform proposal’s potential territorial system implementation against the BEPS/EU/Brexit framework.
  • Consider approaches to income tax filings and transfer pricing.
 

For more information, please contact one of the following practice leaders:
 
Joe Calianno
Partner and International Tax Technical Practice Leader
National Tax Office 
     Monika Loving
Partner and International Tax Practice Leader