A quick look at what’s on International Treasurer’s radar screen this week.
Here are a few of the topics coming from this week’s International Treasurer editorial meeting:
Corporate tax
The state of corporate taxes doesn’t look like it will be on anyone’s agenda in the US this year, but that doesn’t mean US MNCs should be complacent about change. In Europe, regulators are taking a close look at corporate tax loopholes across the continent, which they feel allows companies to cut their tax bills. Meanwhile, the OECD will continue its pursuit of a plan to combat BEPS – Base Erosion and Profit Shifting. The plan is to “equip governments with the necessary domestic and international BEPS prevention instruments,” according to tax consultancy Taxand.
Back in the US, MNCs must contend with myths about corporate taxes. “The statutory corporate income tax rate of the United States is infamously one of the highest in the world, while effective tax rates on capital investments appear to be high and dispersed,” says the Tax Foundation, which recently released a report, “The U.S. Corporate Effective Tax Rate: Myth and the Fact.” Some findings:
- The marginal effective tax rate (METR) on corporate investment (i.e., the tax impact on capital investment as a portion of the cost of capital) is 35.3 percent in the U.S.—higher than in any other developed country.
- The U.S. has maintained the highest METR in the OECD since 2007, when Canada’s multiyear program of corporate tax reform brought its METR below the G-7 average.
- Nonetheless, the White House and Treasury Department continue to assert that the U.S. has a lower METR than Canada by failing to properly account for sales and property taxes.
On-shoring
According to a report from PWC, “Emerging Real Estate,” companies are moving factories back to the US much more quickly than anticipated, and in a wide variety of industries. The report says they doing this to shorten their supply chains and because China has simply become ever more expensive to produce goods in. We’ll take a look at what types of industries are returning to the U.S., where they’re going, and the types of savings they anticipate.
CFTC could allow Europe reg compliance
A WSJ article recently that said the CFTC is letting US swap users to follow European regs, rather than requiring them to use US ones. The Euro regs are not yet complete, but they’re likely to be less strict, and so there’s concern that US banks and companies will move their swap transactions over to Europe. In addition, swap end-users in the US will be affected by bank capital requirements from which European banks may be exempt if transactions are with corporate end-users. IT will keep an eye on the issue to see how it plays out.