Key U.S. Tax Provisions of the Inflation Reduction Act of 2022
August 17, 2022

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“the Act”). This tax alert highlights some of the key U.S. federal income tax provisions of the law. 


The Act includes:

  • A new corporate minimum tax,
  • A 1 percent excise tax on certain corporate stock buybacks,
  • Additional funding for the U.S. Internal Revenue Service, and
  • Energy-related tax credits.


Notably, the Act does not contain increases in the top tax rates for individuals, corporations, or estates.


15% Corporate Minimum Tax

The 15 percent corporate minimum tax would apply to corporations that meet an average annually-adjusted financial statement income test for tax years beginning after December 31, 2022. The test is met when the average 3-year annually-adjusted financial statement income exceeds $1 billion USD and other requirements. There are special rules that apply to non-U.S. parented multinational groups.


The 15 percent corporate minimum tax is not expected to impact most small and midmarket businesses in the U.S. The Bill does not currently include a global minimum tax on non-U.S. earnings of U.S. multinational businesses. Non-U.S. investors with public and private interests in corporations subject to the 15 percent corporate minimum tax may see decreased earnings from the corporation.


1% Excise tax on Corporate Stock Buybacks

The new excise tax generally applies to U.S. publicly-traded corporations. The excise tax also applies to non-U.S. publicly-traded corporations that are treated as surrogate foreign corporations after September 20, 2021. 


Additional Internal Revenue Service Funding

The Act provides an additional $78.9 billion in funding to the U.S. Internal Revenue Service. More than half of the funding goes toward tax enforcement. $25.3 billion is allocated to operations support. The Act also provides $4.75 billion for business systems modernization and $3.2 billion for taxpayer support services.

It is expected that it will take time for the Internal Revenue Service to be able to implement the services as stipulated in the Act.


Please contact International Capital Associates, LLC if you need assistance with Inbound Tax Planning and Structuring or Inbound Income Tax Returns.

U.S.-Russia Tax Treaty Suspension

June 18, 2024
The U.S. Department of the Treasury announced on June 17, 2024, that the United States has formally notified the Russian Federation about the suspension of certain articles and provisions of the Convention between the United States of America and the Russian Federation for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed at Washington, June 17, 1992. This suspension will take effect on August 16, 2024, and will continue until otherwise decided by the two governments. This decision is in response to the Russian Federation's notification on August 8, 2023, expressing its desire to suspend specific articles and provisions of the Convention and the Protocol. The announcement can be seen at United States’ Notification of Suspension, By Mutual Agreement, of the 1992 Tax Convention with Russia | U.S. Department of the Treasury . Taxpayers who rely on the U.S.-Russia income tax treaty should plan for this suspension. Please contact International Capital Associates, LLC if you need help planning for the treaty suspension or if you need other U.S. tax services .

U.S. Internal Revenue Service Releases Updated Form W-8EXP With Updates for Qualified Foreign Pension Funds

December 11, 2023
In November 2023, the U.S. Internal Revenue Service released an updated Form W-8EXP. The Form W-8EXP is a U.S. withholding tax certificate for foreign governments or other foreign organizations. Confusingly, the words “qualified foreign pension fund” do not appear on the Form W-8EXP. However, the updates to the Form W-8EXP are intended to allow a non-U.S. pension fund (or qualifying entity) to certify its Qualified Foreign Pension Fund status. A non-U.S. pension fund may certify that it is a “Withholding Qualified Holder Under Section 1445” provided it meets the requirements of Section 897(l) and Treas. Reg. 1.897(l)-1 as a Qualified Foreign Pension Fund. A “Qualified Holder” includes certain wholly-owned entities that meet the requirements of Treas. Reg. 1.897(l)-1(d)(2) or (3). A “Withholding Qualified Holder” also consists of a non-U.S. partnership wholly owned by Qualified Holders. Unfortunately, Form W-8EXP still does not contain sections to allow the taxpayer to claim the benefits of a U.S. income tax treaty. Non-U.S. pension funds and governments will still need to complete Form W-8BEN-E to claim U.S. income tax treaty benefits with a U.S. withholding agent, such as reduced dividend and interest withholding rates. The release of the updated Form W-8EXP does not invalidate any prior Qualified Foreign Pension Funds certifications. In the future, U.S. withholding agents may request a valid Form W-8EXP instead of other Qualified Foreign Pension Fund certifications. A Withholding Qualified Holder should ensure that the Form W-8EXP is complete and valid to make a Qualified Foreign Pension Fund certification using the Form W-8EXP. Please contact International Capital Associates, LLC if you need help determining if the entity is considered a Withholding Qualified Holder, if you need assistance completing Form W-8EXP , or if you need other U.S. tax services .