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Congress passes, president signs into law $10 billion in international tax increases
The president signed into law legislation that includes international tax provisions estimated to raise $10 billion over the next 10 years. The international tax revenue raisers would make significant changes to foreign tax credit and other international tax rules and would affect many multinational companies. The provisions were pulled from a separate “tax extender” bill that has stalled in the Senate. They will leave a substantial revenue hole in the extenders bill that could complicate efforts to pass extender provisions such as an extension of the research credit.
The bill uses seven of the eight international revenue raisers originally proposed on the extenders legislation, leaving out only the provision to amend source rules for “guarantee fees.” On the positive side, the bill also includes a retroactive technical correction to an amendment to the statute of limitations rules for certain foreign reporting rules enacted earlier this year as part of the Hiring Incentives to Restore Employment Act (Hire Act). Few other changes were made to the international provisions apart from a delay in several effective dates. Besides the international tax provisions, H.R. 1586 would also repeal the advance earned income tax credit.
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