Question

Identify at least one tax law change for 2018 (U.S.) you think will have significant impact on current corporate tax compliance and explain why.

Answer 1

Since the introduction of Tax Cuts and Jobs Act (the “Act”) there has been many changes in the tax laws which would have far reaching impacts. While there is sharp reduction in corporate tax, the reduction in credits and deductions may offest the losses.

However, provisions of global intangible low-taxed income (gilti) which provides for tax on income from foreign sources even if that income is not distributed to the U.S. shareholder as a dividend. It provides for recognition of a percentage of previously deferred foreign earnings which is included in the income of the U.S. shareholders, and they would be eligible for a deduction and reduced foreign tax credit.

This provision will lead to companies to reevaluate where they locate their intangible property (“IP”) in the future.