Tuesday, March 4, 2014

President Obama Wants To Eliminate Overseas Tax Avoidance By US Companies!

President Barack Obama released his fiscal year 2015 budget request to Congress on Tuesday March 4, 2014 and lawmakers will promptly ignore it.

But the annual ritual highlights his policy priorities for the coming year and serves as a Democratic Party manifesto as Democrats seek to draw a contrast with Republicans ahead of congressional elections in November which include Overseas Tax Proposals.

The administration wants new limits on overseas tax avoidance by corporations by seeking to prevent them from playing one country's tax rules against an other's.

At the moment, big corporations must pay the top 35 percent corporate tax rate on foreign profits, but not until those profits are brought into the country.

Many lawmakers argue this structure encourages companies to make job-creating investments in foreign countries rather than in the United States.

The proposed reforms to the US International Tax System include (Detail of Proposal):
  1. Defer Deduction of Interest Expense Related to Deferred Income of ForeignSubsidiaries
  2. Determine the Foreign Tax Credit on a Pooling Basis
  3. Tax Currently Excess Returns Associated with Transfers of Intangibles Offshore
  4. Limit Shifting of Income Through Intangible Property Transfers
  5. Disallow the Deduction for Excess Non-Taxed Reinsurance Premiums Paid to Affiliates
  6. Restrict Deductions for Excessive Interest of Members of Financial Reporting Groups
  7. Modify Tax Rules for Dual Capacity Taxpayers
  8. Tax Gain from the Sale of a Partnership Interest on Look-Through Basis
  9. Prevent Use of Leveraged Distributions from Related Corporations to Avoid Dividend Treatment
  10. Extend Section 338(h)(16) to Certain Asset Acquisitions
  11. RemoveForeign Taxes From a Section 902 Corporation’s Foreign Tax Pool When Earnings Are Eliminated
  12. Create a New Category of SubpartF Income for Transactions Involving Digital Goods or Services
  13. Prevent Avoidance of Foreign Base Company Sales Income through Manufacturing Services Arrangements
  14. Restrict the Use of Hybrid Arrangements That Create Stateless Income
  15. Limit the Application of Exceptions Under Subpart F for Certain Transactions That Use Reverse Hybrids to Create Stateless Income
  16. Limit the Ability of Domestic Entities to Expatriate
 Need Help Structuring Your International Business?

Contact the Tax Lawyers at
Marini & Associates, P.A.
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or Toll Free at 888-8TaxAid (888 882-9243)


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