Republican GOP tax bill introduces major reforms to the taxation of US corporations engaged in business operations overseas: Introduction of the participation exemption.
Overview of need for reform of income taxation of US corporations with respect to foreign subsidiaries
As promised from various talks and presentations leading up to the introduction of H.R. 1, 115TH Cong., 1st Sess., the Tax Cuts and Jobs Act, as well as the recent Republican Unified Framework for Tax Reform, released September 27, 2017, the GOP Bill introduces major reforms to the international taxation of U.S. businesses, particularly U.S. corporations owning 10% or more of the stock of a foreign corporation. The changes are wide-sweeping and perhaps controversial and marks a paradigm shift in moving the taxation of U.S. corporations from a worldwide income system, with allowance for claiming deemed foreign tax credits on dividends received from such foreign corporations, to a territorial based, participation exemption system which is utilized by many foreign countries.