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US Treasury Department Report “The Made in America Tax Plan”

28 April 2021

A US Treasury Department report released on 7 April 2021 provides some additional detail around changes—especially within the international tax space—that the White House would like to see made to the tax code as part of the Made in America Tax Plan. In addition to the president’s proposed increase in the top corporate tax rate from 21% to 28%, the Treasury report provides additional background on President Biden’s proposals to modify or eliminate current-law tax provisions that the administration argues provide incentives for companies to locate investment in foreign jurisdictions and move US-based jobs and production activities offshore. In perhaps the most notable development in the international tax arena, the report digs a bit deeper into the administration’s proposal to repeal and replace the base erosion and anti-abuse tax (BEAT). The Treasury report specifically calls for replacing the BEAT regime with a new structure known as “SHIELD” (short for Stopping Harmful Inversions and Ending Low-Tax Developments) that would deny US deductions on related-party payments if they are subject to a low effective rate of tax in the destination jurisdiction.

Although the Treasury report fills in some blanks in the Biden administration’s tax policy platform, it stops short of providing specific details on how these tax proposals would operate or when they would take effect. We could learn more in the coming weeks when the president releases his budget blueprint for fiscal year 2022, which is expected to be accompanied by a Treasury “Green Book” that typically contains more detailed descriptions of an administration’s revenue proposals.

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