A Republican plan to overhaul the U.S. corporate income tax could put the dozens of existing U.S. double-tax treaties in limbo.
U.S. companies doing business abroad may no longer be able to rely on the mechanisms in treaties for resolving cross-border tax disputes—overlapping claims on a company's tax—or they may become one-sided. The issue is one of many technical and practical concerns practitioners are struggling to understand as the broadly outlined plan is debated.
“There's a very serious question about whether these changes are not evolutionary but revolutionary, and would cause the tax to not be covered by the treaties,” said J. Clark Armitage, a transfer pricing and dispute resolution attorney with Caplin & Drysdale in Washington.
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Excerpt taken from the article “GOP Tax Overhaul Could Throw U.S. Tax Treaties into Question” by Alex M. Parker for Bloomberg BNA.