There is widespread consensus that the United States needs to reform its tax system. Since the last significant tax reform, the Tax Reform Act of 1986, the US business tax system in particular has become increasingly out of step and uncompetitive with the rest of the world. Recently, the combination of Republican majorities in both the House and the Senate, coupled with a Republican president, significantly increases the prospects for comprehensive tax reform this year.
President Trump has been outspoken that action in this space is one of his top priorities and Congressional Republicans have endorsed this view, emphasizing that tax reform is essential to their pro-growth agenda. The House Republican Blueprint developed in June 2016 (hereinafter referred to as “the Blueprint”) is the likely starting point. After President Trump’s first address to a joint session of Congress recently, White House officials said that his updated tax reform plan will be released soon.
As a result of the spotlight on the US tax reform, countries worldwide, including China, are inspired to reconsider and reassess their tax systems in order to keep their competitiveness in the global markets. Chinese companies operating in the US should make sure they are familiar with the proposed changes, as well as the impact they may have on their businesses.