Contact: Anna K. Derewenda

Perhaps some of the most extensive changes in H.R. 1, known as the Tax Cuts and Jobs Act (the “Act”), deal with the taxation of multinational companies. The taxation of foreign earnings has long been a point of contention between taxpayers and Congress. The rules reflect a new policy approach to the income of multinationals, as well as carrots and sticks for certain types of activities.

Due to the significant nature of the changes, additional guidance is expected from the IRS and Treasury. The discussion below provides some highlights of the Act, but additional guidance may provide different interpretations.

100% Deduction for Foreign Source Dividends

Historically, U.S. shareholders were taxed on the U.S earnings of foreign companies if a dividend was made or the anti-deferral subpart F or passive foreign investment company (PFIC) regimes applied.

Under the Act, the subpart F and PFIC regimes are left largely intact. However, new Section 245A provides a 100% dividends received deduction (DRD) for the foreign source portion of dividends received from a specified 10-percent foreign corporation by domestic corporations that are U.S. shareholders. A specified 10-percent foreign corporation is a foreign corporation in which any domestic corporation is a U.S. shareholder. A U.S. shareholder is a U.S. person who owns 10-percent or more of the vote or value of a foreign corporation. (See Expansion of CFC Ownership). A one-year holding period is required to claim the DRD. No foreign tax credit or deduction is allowed for exempted dividends.

Read the entire article.

Authors: Matheus Bueno de Oliveira, Frederico Silva Bastos

The globalization and internationalization of companies are phenomena that must be considered by today’s tax administrations. In many situations, such as tax evasion, harmful tax competition and money laundering, domestic statutes seem to be ineffective in a global dimension. To cope with these issues, new forms of regulations have emerged.

In the past, fiscal policies were established in each country solely for domestic troubleshooting. With globalization and the free movement of capital, there has been a push towards the interaction between different tax systems and tax administrations.

Read more: Brazil’s Approach Towards The Exchange of Information

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Foreign persons (including temporary residents) who invest in Australian water now need to register their interest with the Australian Taxation Office.

In the current "stocktake period" of the legislation (1 July 2017 - 30 November 2017) a foreign person that currently holds or acquires during the stocktake period either a:

  • "registrable water entitlement" or
  • "contractual water right" whose term is likely to exceed 5 years as at 30 November 2017,

must register that interest on or before 30 November 2017, or 30 days after acquiring the interest, whichever is the later.

Read more: Foreign Ownership of Australian Water - Don't forget to register!

Written By: S. Eva Wolf

Tired of bossy blogs telling you to get an estate plan?  Good advice is boring. Your life is exciting and should have a dramatic ending.  And you can have it.  All you have to do is nothing.  So the next time someone tells you that you need an estate plan, tell them:

1.  Annie is your favorite musical. When your children misbehave you daydream about the day when they will be forced to live in a grubby orphanage and be abused by a cruel, alcoholic supervisor.  And, when your children act like angels, you are comforted by the certainty that in time a billionaire will rescue them from the orphanage, and they will live happily ever after.

2.  You’ve slaved away at a job that you hate for decades to amass great wealth, and no lawyer is going to swindle you out of ten grand (or less) to protect it.  If you spent that kind of money on something as practical as an estate plan, you might have to spend a little less on designer handbags or forego a mid-life crisis Maserati in favor of a mid-life crisis Corvette.

3.  Your favorite uncle is Sam. You’re thrilled that he could inherit your assets when you die and use them to fund a manned mission to Mars.

Read the entire article.

It is not news that globalization and internationalization of companies are phenomena that need to be considered by modern tax administrations. In many situations, such as tax evasion, harmful tax competition and money laundering, domestic statutes seemed to be ineffective in a global dimension. To cope with that, new forms of regulation have emerged.

Read more: Brazil’s Approach Towards Tax Exchange Of Information