TCJA

The article aims to appreciate the U.S. tax reforms, specially in topics related to international taxation, emphasizing the analysis of their potential incompatibility with the World Trade Organization (WTO) law. It will be discussed in the U.S. international tax framework before the U.S. tax reforms, and what primary changes will be introduced by the Tax Cuts & Jobs Act (TCJA). Following a discussion regarding how taxes can be a trade barrier, it was identified that the U.S. tax rules may not comply with the WTO law. This article provides a brief review of the previous U.S. cases in the WTO, related to taxation, with issues similar to the failures raised in connection with the TCJA, and how the WTO dispute resolution has ruled against the US perspective. The paper concludes with an analysis of what could be done about the tax reforms by trade partners within the WTO, and provides some possible paths to be followed, especially by those who feel hurt by the changes.

This article deals with one of the many unanswered questions of the 2017 tax legislation—the potential impact of a basis adjustment on sale of a lower-tier controlled foreign corporation’s (CFC’s) stock for an upper-tier CFC’s global intangible low-taxed income (GILTI) and Subpart F calculations. The question, a classic exercise in statutory interpretation, revolves around a seemingly incommensurable overlap between the existing rules and the newly enacted statutory language. The implications are far reaching—from fundamentally altering the tax structuring of multinational enterprises to providing a vital precedent to statutory and regulatory interpretation.

An Online Publication of the ABA Tax Section Spring