Posted in Tax Law

U.S. “border tax” – Current House Republican Blueprint

The”destination based Cash Flow Tax” would replace the corporation tax (20/25% depending on the entity) and is similar to the VAT (on receipt + deduction for taxable costs although deduction for wages too and it would apply royalties and interests too).

US export-based companies may be able to gain negative tax liability (max cap of 90%).

US import-based companies would however pay the tax without deduction for non U.S. costs –> tax on a much-higher figure than any real profit.

The best hope is that the WTO would treat the DBCFT like a VAT although the deduction for wages makes this unlikely.

Source

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