美国企业研究所-拜登对美国跨国公司税收待遇的改革：已知与未知（英）-2021.7-18页_6mb

Biden's Reforms to the Tax Treatment of US Multinational Corporations: Summary

Core Content

The Biden administration has proposed significant tax reforms targeting US multinational corporations (MNCs) to increase revenue, reduce profit shifting, and address base erosion. These reforms aim to move the US corporate tax system closer to a worldwide, or residence-based, model, which taxes the global profits of US-based MNCs. The reforms also introduce new anti-base erosion provisions and seek to reverse the global "race to the bottom" in corporate tax rates.

Main Points of the Current Tax Regime

• Pre-TCJA System: The US had a worldwide tax system with deferral, allowing MNCs to defer US tax on foreign profits until repatriation.
• TCJA Changes (2017): The Tax Cuts and Jobs Act (TCJA) reduced the US corporate tax rate to 21% (25.8% including state and local taxes) and introduced a hybrid system:
  • Territorial Treatment for Tangible Assets: Profits from tangible assets in foreign jurisdictions are taxed only once, with no additional US tax upon repatriation.
  • Worldwide Taxation for Intangible Income: Profits from intellectual property (IP) are taxed worldwide, with a lower effective tax rate due to GILTI and FDII provisions.
• Key Provisions:
  • GILTI (Global Intangible Low-Taxed Income): Taxes returns on intangible assets in low-tax jurisdictions, with an effective rate between 10.5% and 13.125%.
  • FDII (Foreign-Derived Intangible Income): Provides a lower tax rate on IP used to serve foreign markets, with an effective rate of 13.125%.
  • BEAT (Base Erosion and Anti-Abuse Tax): A 10% minimum add-on tax on certain base-eroding payments to foreign entities.
  • Section 163(j): Limits net interest expense deductions to 30% of adjusted taxable income (EBITDA).
  • Anti-Inversion Rules: Prevent US corporations from inverting to foreign jurisdictions to reduce tax liability.

Key Aspects of Biden's Proposals

• Corporate Tax Rate Increase: The proposed rate is 28% (32.2% including state and local taxes), up from 21%.
• Worldwide Taxation: All profits of US MNCs would be subject to US taxation, with no deferral.
• Reforms to GILTI:
  • Broadened Scope: GILTI would apply to all foreign profits, not just those from low-tax jurisdictions.
  • Increased Tax Burden: GILTI would be added to taxable income at 75%, leading to an effective tax rate of 21% before foreign tax credits.
  • Country-by-Country Calculation: GILTI would be calculated per jurisdiction, eliminating the blending of high- and low-tax incomes.
  • Elimination of QBAI Exclusion: Corporations would no longer be able to reduce GILTI by excluding qualifying business asset investment.
  • No High-Tax Exception: The high-tax exception for GILTI and Subpart F would be removed.
  • No Exemption for Oil and Gas Income: Previously exempt foreign oil and gas profits would now be taxed.
• Elimination of FDII: FDII would be removed, and its benefits would be replaced with unspecified R&D tax incentives.
• Replacement of BEAT with SHIELD:
  • SHIELD (Stopping Harmful Inversions and Ending Low-Tax Developments): Denies deductions for payments to related entities in low-tax jurisdictions.
  • Scope: Applies to corporations with revenue over $500 million.
  • Multilateral Context: SHIELD is part of the administration's push for a global minimum tax agreement, with a default rate of 21% if no agreement is reached.
• Minimum Tax on Book Profits:
  • Applicability: Corporations with pretax book income of $2 billion or more.
  • Tax Base: Based on book (financial accounting) income, which may differ from taxable income.
  • Rate: 15% of pretax book income, with the ability to offset with general business credits.
  • Net Operating Losses: Can reduce the tax base.

Implications and Uncertainties

• Profit Shifting: The administration claims that the current system allows corporations to shift profits to low-tax jurisdictions and blend high- and low-tax income, which Biden's reforms aim to address.
• Investment Incentives: The reforms may reduce the incentive for MNCs to offshore tangible assets and intellectual property.
• Headquarters Relocation: The changes could discourage MNCs from relocating their headquarters to low-tax countries.
• Uncertainties:
  • The impact of these reforms on corporate investment and profitability is not fully clear.
  • The effectiveness of new anti-base erosion provisions, such as SHIELD, depends on international cooperation.
  • The interaction between the new minimum tax on book profits and existing tax credits and deductions remains under discussion.

Conclusion

The Biden administration's proposals represent a shift from the current hybrid international tax system toward a more comprehensive worldwide tax model. These changes aim to increase tax revenue, prevent profit shifting, and counteract the global trend of tax rate reductions. While the reforms are well-structured, their full economic and administrative implications are still being analyzed, particularly in the context of international tax cooperation.