2. Int'l Tax Update Significant Developments in the Global Tax System - Andrew Seidler
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International tax provisions: Repatriation and DRD<br />
<strong>Tax</strong> Change Post Reform Law Considerations<br />
One-time deemed<br />
repatriation tax on foreign<br />
deferred earn<strong>in</strong>gs (effective<br />
for tax years beg<strong>in</strong>n<strong>in</strong>g<br />
before January 1, 2018)<br />
• Foreign deferred earn<strong>in</strong>gs are taxed<br />
at 15.5 or 8 percent based on<br />
balance sheet attributes (cash &<br />
cash equivalents vs. non-cash<br />
assets, respectively).<br />
• Election to defer payment over 8<br />
years<br />
• Determ<strong>in</strong>e applicability at portfolio and<br />
owner level<br />
• <strong>Significant</strong> diligence item as well as<br />
cash flow concern<br />
• Need to understand E&P on all<br />
impacted companies<br />
• Many states will treat <strong>the</strong> repatriation<br />
as Subpart F <strong>in</strong>come subject to full or<br />
partial dividend received deduction<br />
Dividend Received<br />
Deduction/ Participation<br />
Exemption (effective for<br />
distributions made after<br />
Dec. 31, 2017)<br />
• Certa<strong>in</strong> foreign dividends non-taxable<br />
<strong>in</strong> <strong>the</strong> US<br />
• Certa<strong>in</strong> ga<strong>in</strong>s on sale of foreign<br />
subsidiaries will not be subject to<br />
U.S. federal <strong>in</strong>come tax<br />
• Applicable to C-Corporations with<br />
foreign corporation(s)<br />
• Corporate structure may be benefit<br />
due to participation exemptions<br />
• How significant are foreign earn<strong>in</strong>gs?<br />
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