International tax revenue raisers included in American Jobs and Closing Tax Loopholes Act of 2010
On 20 May, House Ways and Means Committee Chairman Sander Levin and Senate Finance Committee Chairman Max Baucus released a revised version of tax extenders legislation, the American Jobs and Closing Tax Loopholes Act of 2010. The bill includes not only extensions of tax provisions that expired in 2009, but also many other jobs- and small business-related provisions. To pay for these initiatives, lawmakers included in the bill a series of revenue-raising tax provisions, including international tax provisions that could have far-reaching implications for both US and foreign multinationals.
Revenue offsets include the following international tax provisions:
- Prevent the splitting of foreign taxes from foreign income
- Deny foreign tax credits (FTCs) for foreign income not subject to US tax by reason of "covered asset acquisitions"
- Provide for a separate FTC basket for income resourced under tax treaties
- Limit the amount of FTCs claimed as a result of a Section 956 inclusion to the amount that would have been allowed with respect to an actual dividend
- Amend the Section 304 rules to prevent foreign multinationals from avoiding US tax
- Modify the US affiliated group rules for purposes of allocating interest expense
- Repeal the 80/20 company rules
- Provide that guarantee fees are sourced like interest (and not services)
- Repeal the boot-within-gain limitation in the case of any reorganization (including cross-border reorganizations)
Please join us for a 90-minute webcast on Thursday, 27 May at 11:00 a.m. EDT as Ernst & Young LLP professionals provide an in-depth analysis of the international tax provisions, as well as their insights on the next steps with respect to the legislation.
Featured panelists
Jeff Michalak, Ernst & Young LLP, Americas Director of International Tax Services
Barbara Angus, Ernst & Young LLP, International Tax Services - National Tax
Margie Rollinson, Ernst & Young LLP, International Tax Services - National Tax