United States of America

United States of America

U.S. Tax Cuts and Jobs Act (tax reform) signed by the President

22 Dec 2017

The President signed the 'Tax Cuts and Jobs Act' into law, aiming to boost investment in the United States and to create jobs. To that end, the bill contains measures that directly affect the investment climate in the United States, and measures aimed at Multinational enterprises (MNEs) to encourage them to bring overseas funds back home and to reduce the incentive for them to locate certain assets and activities abroad.

Measures that will directly affect the investment climate in the United States include; (1) A reduction of the statutory corporate income tax rate from 35 per cent to 21 per cent effective from 2018, (2) Immediate full expensing of investment cost, (3) The capping of deductible interest to 30 per cent of taxable income. Measures directed at the international tax regime for MNEs include; (1) A switch to a territorial tax system through a 100 per cent deductibility of dividends of foreign affiliates, (2) A transitional measure for existing overseas retained earnings in the form of a mandatory deemed repatriation subject to a one-off tax payment, (3) A set of anti-tax avoidance measures.

Nature of measure:
  • Incentives
Type:
  • Promotion and facilitation (Investment incentives)
Industry:
  • Not industry specific
Inward FDI:
No
Outward FDI:
No
Sources: