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Have you been waiting for a Tax Repatriation Holiday?

December 28, 2016 / 1 min read

Is it time to bring offshore profits back to the U.S.? Maybe not yet, but it’s definitely time to develop a plan to capitalize on a “repatriation holiday” if one is enacted.

While President-elect Trump’s tax plan is expected to lower the top corporate tax rate from 35 percent to 15 percent, the plan also calls for a repatriation of foreign corporate profits at a reduced rate –– providing a onetime tax rate of 10 percent on corporate profits abroad.

While specific details of this plan are still unknown, it appears to allow companies to bring foreign income back to the U.S. at a much lower rate, although, the plan doesn’t appear to be elective. While the tax rate is low, the taxation of foreign profits will be based on a deemed repatriation –– creating taxable income for corporations regardless of where profits were earned.

While the President-elect’s tax plan is yet to become law, the Republican majority suggests that the plan will likely be enacted in 2017 –– making now an ideal time to plan for the changes. For example, if the corporate tax rate is lowered, there could be a tax benefit to transferring foreign taxable income back to the U.S. Additionally, corporations should consider deferring income and accelerating expenses in 2017 in anticipation of the lower rates in 2018.

Contact your Plante Moran international tax advisor to learn more about how President-elect Trump’s corporate tax plan could impact your business.

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