The international tax proposals in President Obama’s fiscal year 2017 budget, released today, look a lot like the proposals in last year’s budget.
The administration has again proposed a one-time 14 percent tax on the unrepatriated foreign earnings of US corporations and a 19 percent minimum tax on the foreign earnings of US controlled foreign corporations and foreign branches. These proposals are estimated to raise $300 billion and $350 billion, respectively, over a ten year period.
Like last year, the budget proposes to limit the ability of domestic entities to expatriate by broadening the definition of an inversion transaction. The budget further seeks to limit excessive interest deductions taken by multinational groups that over-leverage their US operations.
Other proposals expand the definition of Subpart F income to include transactions involving digital goods or services and income from contract manufacturing arrangements, modify the Subpart F controlled foreign corporation attribution rules, and eliminate the 30-day grace period. Together, the Subpart F changes would yield $33 billion over ten years.
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