The headline-grabbing change brought about by the Tax Cuts and Jobs Act enacted at the end of 2017 was easy enough to grasp. The idea was that by offering U.S. companies a one-off, reduced tax rate of 15.5%, C corporations would have an incentive to bring home the more than $2 trillion in untaxed profits accumulated abroad. The offshore stash would otherwise have been taxed at 35% upon repatriation.
In exchange for that, put simply, companies got to pay practically zero U.S. tax on their foreign subsidiaries’ profits going forward as part of the shift from a global corporate tax system to a territorial one.
