U.S. Buyback Tax Could Hit More Foreign Firms Than First Expected
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U.S. Buyback Tax Could Hit More Foreign Firms Than First Expected
Under the U.S. government’s interim guidance released in late December, the buyback tax could apply if a U.S. subsidiary of a foreign company makes ordinary business payments to its parent, such as for paying royalties or purchasing inventory, and then the foreign parent buys back shares within a two-year period of that payment. Tax advisors warn that the tax could hurt the competitiveness of the United States as it might diminish foreign direct investment and may provoke major trading partners to reciprocate.
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