A little bit more on the impact, or rather the non-impact, of U.S. corporate tax reform from the balance of payments data.
Profits that US MNCs report in the main low tax jurisdictions in the last 3 quarters?
Basically, unchanged from before.
Profits that US MNCs report in the main low tax jurisdictions in the last 3 quarters?
Basically, unchanged from before.
Have seen big swings (tho less so in q3) in the split between dividend payments and reinvested earnings (as expected, as the tax reform removes any incremental tax on dividend payments home), but very little change in the geographic location of profits.
US firms still report the bulk of the offshore profits in low tax jurisdictions, not the location of most of their real sales.
the reform, as of now, hasn't led to the onshoring of those profits, or a shift away from low tax jurisdictions
(chart shifts to trailing 4qs)
the reform, as of now, hasn't led to the onshoring of those profits, or a shift away from low tax jurisdictions
(chart shifts to trailing 4qs)
Only change I was able to find: Profits reported in Ireland fell in q3 (effect of the phase out of the double Irish?). But seeing rapid growth in profits reported in the Netherlands (which acts as a conduit between other jurisdictions), so not much overall change.
Not a surprise really -- GILTI (Global intangibles low tax income) carries a lower tax rate than US profits (even with the special rate on intangible profits booked in the US). Doesn't seem to be a strong incentive to unwind existing tax structures.
Hope for change -- for now -- rests on Ireland's commitment to phase out the double Irish (e.g. the creation of a second Irish company in Ireland that isn't a tax resident of Ireland, as I understand it). Perhaps that will induce more change than the US "reform" did
