How could Donald Trump’s election alter international taxes?
Donald Trump’s surprise election win could impact not just the United States, but the world as well. The international tax planning community has been turned on its head from the win, and is now scrambling to decipher just what implications a Trump presidency could have on international taxes. Soon, it is possible that moving out of the U.S. tax system may no longer carry an advantage.
Eliminating Incentives for Companies Moving Out of U.S.
Under current tax laws, many American companies have positioned themselves outside of the United States so that they can take advantage of tax benefits. Trump’s tax plan will reduce corporate tax rates to 15 percent. Trump has also called for an end to the deferral of overseas profits, requiring companies to pay international taxes immediately instead of allowing them to delay payments by refusing to repatriate. Trump additionally expressed the desire for currently deferred offshore income to be repatriated and taxed at 10 percent.
The House Republican introduced a blueprint in June of 2016 that, with a Republican lead House, could soon be put into action. This plan uses a destination based principle akin to a consumption tax. While exports will be exempt from taxes, there would be a tax imposed on foreign imports. The goal of the House Republican plan and President-elect Trump’s tax proposals is to eliminate incentives for companies to move out of the U.S. and allow U.S. products to compete on more equal footing in the global market.
Companies with a global reach should consult with a San Diego, California international tax lawyer for assistance with the evolving worldwide tax system. International companies face a variety of tax obligations and hold the potential for excessive taxation due to taxes imposed by foreign countries as well as the United States. An international tax lawyer can evaluate your tax exposure and the international as well as domestic laws that impact your business to reduce your tax obligations and maximize your profits.