International Rules Still Not Complete


          After over a year and a half since the passage of the Tax Cuts and Jobs Act (TCJA), the regulations that apply to many international transactions are still not finalized. There are issues that still need to be addressed as companies are unsure how to proceed. They are making some conservative guesses but are really looking for clarity from the Internal Revenue Service (IRS).

          For example, there is the Foreign Derived Intangible Income (FDII) provision. This is a potential deduction for businesses, but it can only be claimed if the business can prove that what it sells is for foreign use. In this way, a company’s decision on where to locate its headquarters will not be based on how it can avoid paying taxes where most of its goods are sold. Companies are unwilling to alter their normal business operations to prove that they qualify for FDII. The IRS has indicated that there will be more options given to prove that they qualify. This rule was proposed on March 4 and there will be a hearing on July 10. The true details of the TCJA are still being worked out.

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