Trump, Legislation and Tax – How will tax reform impact international businesses?

April 2017

By Joe Calianno, Todd Simmens, Scott Smith

While President Trump has formally announced his intentions for simplifying the tax code, specific policy details remain unclear. Now more than ever, U.S. federal tax reform is top-of-mind for businesses across the globe. On March 28, we hosted a webinar with BDO UK to review the tax reform changes proposed by both the Congressional GOP’s “Blueprint” plan and the president, and discuss the potential ramifications for international businesses. You can view the full webinar, hosted by BDO UK’s Malcom Joy and featuring BDO USA’s Todd Simmens, Joe Calianno and Scott Smith, below.
 

 
During the webinar, we polled the participants on what they think is on the horizon for U.S. tax policy. Take a look at their responses below.

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While the majority (59%) of our international audience believe that tax reform is likely under President Trump, this is an interesting contrast from our annual survey of U.S. tax executives, in which 100% of respondents said they think tax reform will occur.

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In light of the failure to secure the votes necessary to pass legislation to repeal the Affordable Care Act, concern has grown that the Trump administration and GOP members in Congress have burned a significant amount of political capital that may impair their ability to move forward with other legislative priorities. Our poll, taken just 4 days after the repeal failed, found that 40 percent of participants said the fate of Trumpcare influenced their feelings on the likelihood of tax reform legislation passing. 

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Chief among President Trump’s tax reform promises is slashing the federal tax rate for U.S. businesses from 35 percent to 15 percent, but now multiple outlets say this plan is being abandoned in favor of one that could gain greater congressional, and potentially bipartisan, support. Our poll found that while the majority believe the corporate tax rate will come down, most believe it will settle around the 20-24 percent mark when all is said and done.

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The final poll question addressed opinions on territorial tax. Based on the GOP House Blueprint (and certain earlier tax reform proposals), there is a strong likelihood that the United States may move from a worldwide tax system to a territorial tax system where dividends from foreign subsidiaries generally would be exempt from U.S. tax. Our polling audience agreed with this potential change as well.

Learn more about tax executives’ 2017 outlook in our Tax Outlook Survey.
 

For more information please contact:
 
Joe Calianno
Partner and International Technical Tax Practice Leader
  Todd Simmens
National Managing Partner, Tax Risk Management

 
Scott Smith
Technical Practice Leader, State and Local Tax