What is a territorial tax and does the United States have one now? Q.What is a territorial tax and does the United States have one now? A.Under a territorial tax, the United States would not tax profits earned overseas by US-resident corporations. The Tax Cuts and Jobs Act effectively exempted some of these profits, but retained taxation on some categories of foreign profits and imposed a new minimum tax on another. Read more about What is a territorial tax and does the United States have one now?
How would formulary apportionment work? Q.How would formulary apportionment work? A.Under the current global system, multinational firms determine their profits separately in each tax jurisdiction in which they operate. An alternative system would allocate a firm’s worldwide income across countries using a formula based on some combination of its sales, assets, and payroll in each jurisdiction. Read more about How would formulary apportionment work?
How does the current US system of international taxation work? Q.How does the current US system of international taxation work? A.All countries tax income earned by multinational corporations within their borders. The United States also imposes a minimum tax on the income US-based multinationals earn in low-tax foreign countries, with a credit for 80 percent of foreign income taxes they’ve paid. Most other countries exempt most foreign-source income of their multinationals. Read more about How does the current US system of international taxation work?