On August 10, 2010, The Education Jobs and Medicaid Assistance Act was signed into law.  The Act includes several international tax reforms affecting multinational corporations. The measure provides $26 billion in aid to state and local governments, preserving public-sector jobs at a time of persistent unemployment. The law will raise $10.8 billion through changes to the tax code, according to Joint Committee on Taxation estimates. Among the offsets is a provision that prevents the splitting of creditable foreign taxes from the associated foreign income. The law also prevents businesses from claiming tax benefits when they engage in covered asset acquisitions and limits the use of section 956 for foreign tax credit (FTC) planning.

Other offsets in the law:

• Separate the application of the FTC limitation to items
• Re-sourced under tax treaties;
• Ensure that earnings of foreign subsidiaries of U.S. companies
  are subject to withholding tax when those earnings are repatriated to a
  foreign parent corporation as a dividend;
• Tighten affiliation rules that seek to prevent taxpayers from
  excluding foreign interest expense from the FTC limitation by placing it
  in foreign subsidiaries;
• Repeal the 80/20 withholding rules for dividends; and
• Eliminate the advance earned income tax credit

Tags: Education, Medicaid Assistance Act

This entry was posted on Friday, August 20th, 2010 at 2:12 pm and is filed under Tax, Tax Legislation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.