John Warner, shareholder in the firm's Tax section, comments on the U.S. Department of the Treasury's proposed rules on foreign tax credits in Law360's article "Treasury Limited In Offering Foreign Tax Credit Relief."
John's comments include:
"There are a lot of these ancillary things that I think Treasury was fairly accommodating to taxpayers on, [including] little mini-allocations that on the margins taxpayers will be somewhat grateful for," he said.
But Warner added that "the big 800-pound gorilla" is the combination of the need to allocate at least some indirect expenses to GILTI income, which will lower the threshold to avoid excess foreign tax credits, and the lack of a carryover.
"That just makes it real dollars that are lost by multinationals," he said. "That’s where the real angst is and is going to be."
Warner, on the other hand, noted that Congress was "looking at things from 10,000 feet" and therefore the inclusion of the rate discussion in the conference report wasn’t enough to give Treasury regulatory authority.
The language in the report seems "too generalized to support the idea that you ought to exempt GILTI … from any allocation of these kind of indirect expenses the group may have," he said.