Loren Ponds and Jorge Castro Comment on President Biden's Proposal to Eliminate FDII in Tax Notes
"Biden Proposes Eliminating FDII, Changing Earnings-Stripping Law"
Loren Ponds and Jorge Castro, both Members at Miller & Chevalier, weighed in on President Biden's Made in America Tax Plan, which advocates for the "complete elimination" of the foreign-derived intangible income (FDII) provision. "I think you have to look at this in the totality. . . . All of this is colored by the proposal to raise the corporate rate," Castro said. "That's really going to be the balancing act. . . . Hopefully we are going to have more detail in the Greenbook." Ponds said the proposed elimination of FDII is "troubling" for companies, even though the administration said it plans to replace it with targeted research and development incentives. "If it's in response to a fear that the WTO might find it to be a prohibitive export subsidy, [the repeal is] premature," Ponds said. "We're not there yet; the provision goes under review by the [OECD forum]. To repeal it at this point is harmful to many businesses."