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Mike Heimert, managing director and Global Head of Duff & Phelps' Transfer Pricing Practice, was quoted in an article for Transfer Pricing Week (TP Week). The article discusses the U.S. tax reform bill related to the establishment of a new base erosion and anti-abuse tax (BEAT) and a controversial new tax on intangibles (GILTI).
Most of the tax bill’s provisions are effective for tax years beginning after December 31, 2017, with new controversial measures for transfer pricing professionals aimed at intangibles and profit shifting.
Regarding the introduction of a minimum tax on global intangible low-taxed income (GILTI) by U.S. shareholders, Heimert commented, "the incentive remains for companies to keep their intangible income in non-U.S. jurisdictions with lower tax rates. Because sales or transfers of existing intangible property out of the U.S. now requires the inclusion of goodwill, going concern-value, and workforce in place within the definition, and that intangibles can be valued using the conceptual framework of ‘realistic alternatives’, some U.S. companies that have not already transferred their intangibles to the U.S. may find it to be more costly, without proper planning, to now do so."
“In addition, with intangible property that is outside the U.S., when coupled with the OECD BEPS initiative, there will be a greater desire to have intangibles reside in jurisdictions where the company can demonstrate it has DEMPE Functions,” Heimert added.
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