Fenwick tax partner Larissa Neumann spoke with Law360 about the changes multinational businesses would like to see in the U.S. corporate tax code. Desire for these changes comes at a time when U.S. regulators consider limits to how multinational companies can claim credits for foreign taxes paid and politicians seem poised to tackle reforms.
These include a lower tax rate, a territorial tax system, permanent repatriation provisions, a more consistent and simpler tax code and simple reporting obligations with fairer penalties.
Neumann told Law360 that the U.S. tax code puts businesses at a disadvantage internationally due to its worldwide system of taxation, where it taxes income earned overseas by a foreign subsidiary once that income is repatriated.
“Most other countries do not have a worldwide system of tax and only tax income earned in the country,” she said.
In discussing repatriations, Neumann mentioned that politicians have proposed allowing U.S. multinationals to bring their offshore earnings back home at a lower tax rate as a one-time provision, and advocated making such a provision permanent.
“It would bring income into the U.S. and also reduce the so-called stateless income claims. Allowing U.S. multinationals to repatriate their offshore cash tax efficiently would limit the European Commission's ability to say that any repatriated income should be subject to tax in the EU. It would be a win-win for the U.S. government and U.S. multinationals,” Neumann said.
The full article is available through the Law360 website (subscription required).