Friday, February 13, 2015
PwC's Report on the Green Book - Obama FY 2016 Budget proposes minimum tax on foreign income and PwC's analysis of other significant international tax proposals
Treasury's 'Green Book,' released February 2, 2015, outlines the Administration's FY16 Budget proposals. It explains a new proposal for a 19% minimum tax on foreign income and a one-time 14% transition tax on previously untaxed foreign income. It also significantly changes some international tax proposals made in previous Budgets. The Budget reaffirms President Obama's support for 'business tax reform' that would lower the top US corporate rate to 28% (25% for domestic manufacturing income).
For US multinationals, the focus in the Administration's FY 2016 Budget has shifted from outbound intangible property transfers and base erosion to the minimum and transition tax concepts that would fundamentally change the US international tax system. While the President mentioned a 'minimum tax on overseas profits' in his 2012 business tax reform framework, the FY 2016 Budget is the first time the Administration has laid out specific proposals for a minimum tax on foreign earnings. Additional new international items include further subpart F tightening and immediate application of worldwide interest expense allocation.