TAG Tax

As you may be aware, the US Government passed significant tax reforms in late 2017, and one of the major reforms was the wholesale conversion of its system of taxing corporate business income from a worldwide taxation system to a territorial taxation system. Under the old worldwide taxation system, business profits earned in a foreign subsidiary and repatriated to a US parent corporation were taxable in the US, with credit being provided for the foreign taxes paid by the foreign subsidiary. This meant that business profits earned in a lower tax jurisdiction would be subject to a “top-up” tax on repatriation to the US. Under the new territorial taxation system, business profits earned in a foreign subsidiary may be repatriated to the US without additional US income tax being applied.

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