Five Questions Every Tax, Treasury and Logistics Executive Should Ask In Light of the Changing International Tax Landscape
Finance executives of U.S. multinational organizations (“MNEs”) should review how the interplay of the following initiatives can impact them: (i) pending U.S. tax reform’s international proposals; (ii) the OECD’s BEPS initiative; and (iii) Brexit.
1. How does the interplay of these three initiatives impact:
- Tax profile
- Treasury options
- Supply chain
- Corporate structure
2. What areas should be vetted?
- Identify tax efficient repatriation options
- Maximize foreign tax credits and after tax cash balances
- Navigate the potential “one-time tax” on foreign earnings under certain U.S. tax reform proposals
- Rework EU structures to mitigate IP, finance and supply chain challenges, as well as potential local exit and withholding taxes
- Evaluate overall impact on tax and financial disclosures
3. What tax attributes should be reviewed?
- Locate sources and calculate earnings and profits (“E&P”)
- Calculate foreign tax pools
- Analyze foreign subsidiary share basis and fair market value
4. What are the key areas of planning considerations?
- Holding company structures
- Intellectual property situs
- Tax attribute utilization
- Supply chain modification
5. What are my next steps?
- Review common denominators to evaluate alternatives (i.e., assess inventory of cash, including “trapped” cash; firm up E&P and associated foreign tax pools; analyze share and asset tax basis)
- Reduce or harvest tax attributes as appropriate
- Model practical options for repatriation of foreign earnings
- Identify practical changes to the supply chain that balance the U.S. tax reform proposal’s potential territorial system implementation against the BEPS/EU/Brexit framework
- Consider approaches to income tax filings and transfer pricing
For more information on the matters discussed above, please contact MFA’s Tax Team.
Material discussed in this communication is meant to provide general information and should not be acted on without obtaining professional advice tailored to you or your company’s individual and specific needs. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This information is for general guidance only and is not a substitute for professional advice.
The information contained herein should not be construed as personalized investment advice. Investment in securities involves the risk of loss, and past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this document will come to pass. Historical performance results for investment indexes and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that your portfolio will match or outperform any particular benchmark.
Information presented was obtained from sources deemed qualified and reliable; however, MFA makes no representations as to accuracy, completeness, suitability, or validity of any information within this communication and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any forward-looking statements are believed to be reasonable; however, MFA gives no assurance that such expectations will prove to be correct.