The Geometry of International Tax Planning After the Tax Cuts and Jobs Act: A Riff on Circles, Squares, and Triangles

National Tax Journal, Forthcoming

33 Pages Posted: 1 Oct 2019

See all articles by Michael P. Donohoe

Michael P. Donohoe

University of Illinois at Urbana-Champaign - Department of Accountancy

Gary A. McGill

University of Florida - Fisher School of Accounting

Edmund Outslay

Michigan State University - Department of Accounting & Information Systems

Date Written: September 19, 2019

Abstract

The enactment of the so-called Tax Cuts and Jobs Act of 2017 (TCJA) significantly changes the landscape for tax planning and compliance by U.S. multinational corporations (MNCs). The promised shift to a more territorial system actually results in a greater likelihood that more of a U.S. MNC’s foreign income is subject to current U.S. taxation. The TCJA complicates effective tax planning for such firms, forcing them to reexamine their existing global structures and financial arrangements (i.e., the “geometry” of international tax planning). We briefly review international tax planning before the TCJA as well as some key international tax provisions in the TCJA. We then provide a method to estimate the new Global Intangible Low-Taxed Income (GILTI) tax from a U.S. MNC’s financial statements when such information is not publicly disclosed and illustrate the effective tax rate (ETR) and GILTI tax effects for a small sample of public firms after the TCJA. Finally, we discuss some likely changes in international tax planning going forward.

Keywords: corporate tax, international tax, Tax Cuts and Jobs Act, organizational structure

JEL Classification: H25, H26, M41, M48

Suggested Citation

Donohoe, Michael P. and McGill, Gary A. and Outslay, Edmund, The Geometry of International Tax Planning After the Tax Cuts and Jobs Act: A Riff on Circles, Squares, and Triangles (September 19, 2019). National Tax Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3456752

Michael P. Donohoe (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Gary A. McGill

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States
352-273-0219 (Phone)
352-392-7962 (Fax)

HOME PAGE: http://warrington.ufl.edu/fsoa/faculty/facultyinfo.asp?WEBID=1132

Edmund Outslay

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
(517) 432-2912 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
97
Abstract Views
236
rank
272,374
PlumX Metrics