Reconsidering Tax Planning Strategies for International Middle Market

by | Jun 11, 2018 | International Desk, PKF Texas - The Entrepreneur's Playbook®, Tax and Accounting Desk

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here today with Frank Landreneau, one of our International Tax Directors. Frank, welcome back to the Playbook.

Frank: Well, thanks, Jen. It’s great to be back again.

Jen: Last time we talked a little bit about tax reform—how it impacts international businesses—and so, what were they doing before and then what does the tax reform mean to them now?

Frank: The landscape has truly changed, because before, middle market companies with overseas operations were really trying to shift earnings to overseas operations to minimize tax. That’s commonly known as a deferral strategy. You don’t pay tax on that income until you repatriate it back to the U.S. That was the crux of all international tax planning, particularly for middle market companies.

Jen: Now, with the new reform, what is that going to look like?

Frank: Now, the tax planning has kind of turned on its head with a lot of different provisions of excluding foreign dividend income from taxation and making those changes permanent. Companies are now looking at what can we do to actually shift some production to the U.S. with lower tax rates and minimize exposure overseas, if that’s in their game plan.

Jen: Is there a timeframe where they need to get all their ducks in a row, or is it just kind of an ongoing type thing?

Frank: Now is the time to re-look at everything that they’re doing, whether it’s supply chain, entity structuring; there’s incentives. The new tax reform heavily favors the domestic corporation type of entity. It’s one area that entities that are doing business as partnerships and S corporations are really taking a look at, should we change entity types, or should we do a different type of entity for a particular type of activity, etc.

Jen: Well, that sounds great and I know we’ve got a lot more to talk about this. We’ll get you back next time.

Frank: Great, thank you.

Jen: Thanks, Frank.

Frank: I appreciate it.

Jen: To learn more about other international topics, visit www.pkftexas.com/internationaldesk. This has been another Thought Leader Production brought to you by PKF Texas the Entrepreneur’s Playbook. Tune in next week for another chapter.

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