On March 31, President Joseph Biden released his $2 trillion infrastructure plan known as the American Jobs Plan (AJP), which calls for significant investment in infrastructure. The cost of this plan will be funded by significant corporate tax increases, including changes to international provisions enacted under the Tax Cuts and Jobs Act of 2017.
The AJP tax proposals which could affect multinational companies doing business in the US include: •Raising the corporate tax rate from 21% to 28% •Increasing the minimum tax computed under the global intangible low-taxed income (GILTI) regime from 10.5% to 21% •Seek a global agreement for a strong minimum tax on corporations and denying deductions to foreign corporations that strip profits out of the U.S. if they are based in a jurisdiction without a “strong minimum tax.” •Denying deductions to companies that offshore jobs and providing credits to companies that onshore jobs. •Eliminating the favorable deduction for foreign derived intangible income (FDII). •Requiring large US corporations to pay the greater of the normal corporate tax liability or 15% of book income.
Although passage of these tax proposals into law is not yet certain, multinational companies doing business in the US should carefully analyze the potential effects of the AJP tax proposal on their US and global tax profile. More information can be obtained at www.crowe.com. and from your Crowe tax contact.
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