U.S. International Tax Reform:  Potential Changes to Subpart F

International Tax Journal
July-August 2011

In this article, Marc Gerson and Layla Asali discuss fundamental tax reform, which is being considered by Congress and the Administration.  It is anticipated that changes to the current deferral regime will be evaluated, particularly given that the Joint Committee on Taxation recently identified deferral as the largest corporate tax expenditure at an estimated cost of $70.6 billion from 2010 to 2014.  There are a number of notable tax reform proposals, as well as introduced legislation and proposals from the Obama Administration, which propose significant changes to deferral.  These proposals range from broad reforms, such as the adoption of a territorial system or elimination of deferral, to more targeted proposals that would limit deferral with respect to certain types of income.  Each of these proposals should be scrutinized and evaluated carefully by policymakers, particularly with respect to the potential impact of these proposals on the competitiveness of U.S.-based multinationals and, more generally, on the overall U.S. economy.

Reproduced with permission from International Tax Journal

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