The US Government has proposed minimum tax on foreign income and one-time tax on profits stockpiled offshore in its 2016 fiscal budget.
The minimum tax on foreign earnings is intended to reduce current incentives to trace production overseas and shift and maintain profits in low tax jurisdictions. As per the proposal, the foreign earnings of a multinational’s controlled foreign corporation (CFC), branch, or from the performance of services, that are not subject to tax under sub chapter F would be taxed currently at a rate equal to 19 percent minus 85 percent of the foreign-country effective tax rate. The 14 percent one-time tax on multinational earnings accumulated overseas would apply irrespective of whether the funds are repatriated or not. The budget also proposes other important tax measures.
