Question

The 2017 Tax Act significantly changed US taxation of international activities ( repatriation/ territorial system, GILTI, FD II, BEAT). Based on the course materials, including class discussions and recent developments, select one new international tax provision, and briefly discuss how that provision has impacted US multinational corporations. You can discuss how this provision has impacted US multinational corporations in general or a specific company. Emphasize current developments.

Answer 1

The various changes in the USA corporation taxation system has affected the international activities.

There has been various changes such as

Change in corporation tax to a flat tax rate.

Now the tax rate for the corporations has been reduced to a flat rate of 21%.

This flat rate means that there will be no difference between the tax burden for a large companies or for a small company. This means that you have to pay 21% tax rate even if you make $1 or $200000 in a year. Tax rate is now flat tax rate.

Reduction in the application of NOL

Now there has been a change in the application of net operating loss. The new provision are that the previous year’s loss can be adjusted against the future incomes but only up to 80% of current year incomes. This simply means that still the corporations are required to pay tax on the remaining 20%i income.

Now NOL can also not be carried backward.