Trump Administration, Republican Congressional leaders release new tax reform framework

Sep 2017

As you may be aware, the Trump Administration and Congressional Republican leaders released a nine (9) page “unified framework for fixing our broken tax code” (the Framework) on September 27th that includes specific goals for lower business and individual tax rates. This Framework builds off an earlier July 27th joint statement. While the Framework is still missing many details and leaves many questions unanswered, it highlights the Administration’s guiding principles.

The Framework contains some important guiding information on tax reform for business and individuals.  However, there are still many aspects of the Framework that will impact functional areas outside of tax, especially with respect to how companies think about their deals strategy and international operations going forward.  The Framework’s most relevant provisions are summarized below:

Domestic Business Provisions:

  1. Reduction in the corporate rate to 20%
  2. 25% pass-through rate with anti-abuse rules to prevent re-characterization of wages
  3. Repeal of corporate alternative minimum tax (AMT)
  4. 100% expensing for at least 5 yrs effective as of 9/27/17
  5. Some restrictions on the deduction for business interest expense
  6. Elimination of most business tax preferences (Sec 199, etc.) but not the research credit.
  7. Individual tax will have three (3) separate tax brackets that may increase buying power of consumers

International Business Provisions:

  1. 100% dividend exemption system (territorial tax)
  2. Anti-base erosion rules described as taxing at a reduced rate and on a global basis the foreign profits of U.S. MNCs. (Min, Tax).
  3. A mandatory/deemed repatriation tax with unspecified bifurcated tax rates paid over several years.

The Framework statement marks a major milestone in efforts by President Trump and Congressional Republicans to enact the first major tax reform legislation since 1986. Tech companies have spent years lobbying for some of the proposed ideas, particularly the proposal for a territorial tax system which affects some of the biggest stakeholders in the industry who currently have billions in profits parked overseas. While offering a few specifics, the Framework ultimately leaves many difficult policy issues to be resolved by the House and Senate tax-writing committees. Significant political hurdles also must be overcome if Congress is to enact a sustainable reform of US tax law that will provide a more competitive tax system for business taxpayers.

Contact us

Gwenda Ho


Tel: +[852] 2289 3857

Follow us