Proposed changes to the foreign tax creditĬountry-by-country FTC limitation and repeal of foreign branch income category For corporations whose taxable income exceeds $10 million, the benefit of the lower rates would be effectively phased out through a top-up tax to equal the 26.5% rate on all income. Specifically, this rate would apply to the highest bracket of a new graduated corporate income tax rate, starting at 18% on taxable income of $400,000 or less, then 21% on income from $400,000 to $5 million, and finally 26.5% on income over $5 million. The HW&M Proposal would increase the federal corporate income tax rate to 26.5%. For discussion of prior releases of tax proposals and draft legislative text as part of the Build Back Better Plan, please refer to our prior Alerts on the Biden Administration's Green Book proposal and Senate Finance Committee Chair Ron Wyden's proposal. In this Alert, EY provides a detailed discussion of the proposed modifications to the US international tax provisions in the HW&M Proposal. To supplement the HW&M Proposal, the House Ways and Means Committee also released a section-by-section summary, and the Joint Committee on Taxation released a description of the proposed changes (the JCT report). With important exceptions, most of these changes would be effective for tax years beginning after December 31, 2021.
#Section 263 h code
Provisions potentially affected by the HW&M Proposal include the foreign tax credit ( FTC), the global low-tax intangible income ( GILTI) regime, the base erosion and anti-abuse tax ( BEAT), and the interest expense limitation under Internal Revenue Code (IRC) Section 163, 1 among others. In the tax portion of its budget reconciliation bill (released September 13, 2021), Chairman Neal of the House Ways and Means Committee proposed significant changes and additions to US international tax rules (the HW&M Proposal). House Ways and Means Committee Chair proposes comprehensive international tax changes for reconciliation bill
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