U.S. Tax Bill May Inspire Cuts Globally, While Fueling Trade Tensions
- 6 years ago
U.S. Tax Bill May Inspire Cuts Globally, While Fueling Trade Tensions
The European Commission, which manages the European Union, objected to a tax break
that companies in the United States would get for so-called foreign-derived intangible income — money they make from selling property or services abroad.
Mr. Zhu did not offer details about the measures China might take, but they could include streamlining regulations
that foreign businesses face, or deferring certain taxes if money is reinvested locally, according to Andrew Choy, a tax partner for Greater China at EY.
“Companies know that when they send money to China, it’s basically a one-way gate,” said Christopher Balding,
an associate professor of finance at the Peking University HSBC School of Business in Shenzhen, China
“There will be pressure for a new round of lowering corporate taxes,” said Stefano Micossi,
the director general of Assonime, an Italian association of publicly listed companies.
The tax “may harmfully distort international financial markets,” a group of European
finance ministers wrote to officials in the United States last week.
“The commission will reflect on all possible measures
that may need to be taken if the bill enters into force as agreed today,” the commission said in a statement.
“The external impact of tax policy change in the world’s largest economy cannot be overlooked,” Mr. Zhu said, according to Xinhua.
The new rate — down to 21 percent, from 35 percent — takes the United States from the top of the global tax spectrum to the lower end.
The European Commission, which manages the European Union, objected to a tax break
that companies in the United States would get for so-called foreign-derived intangible income — money they make from selling property or services abroad.
Mr. Zhu did not offer details about the measures China might take, but they could include streamlining regulations
that foreign businesses face, or deferring certain taxes if money is reinvested locally, according to Andrew Choy, a tax partner for Greater China at EY.
“Companies know that when they send money to China, it’s basically a one-way gate,” said Christopher Balding,
an associate professor of finance at the Peking University HSBC School of Business in Shenzhen, China
“There will be pressure for a new round of lowering corporate taxes,” said Stefano Micossi,
the director general of Assonime, an Italian association of publicly listed companies.
The tax “may harmfully distort international financial markets,” a group of European
finance ministers wrote to officials in the United States last week.
“The commission will reflect on all possible measures
that may need to be taken if the bill enters into force as agreed today,” the commission said in a statement.
“The external impact of tax policy change in the world’s largest economy cannot be overlooked,” Mr. Zhu said, according to Xinhua.
The new rate — down to 21 percent, from 35 percent — takes the United States from the top of the global tax spectrum to the lower end.