What the U.S. Tax Changes of the "Inflation Reduction Act of 2022" May Mean for Non-U.S. Investors
July 28, 2022

The bill in its current form likely does not significantly impact U.S. investments of non-U.S. investors.

In a surprise deal negotiated between Senators Chuck Schumer and Joe Manchin, the senators released a joint statement regarding their support of the proposed Inflation Reduction Act of 2022 ("the Bill"). The senators noted support from President Biden and House Speaker Nancy Pelosi to pass the Bill by the end of 2022. However, it's unclear if the proposed Bill will be enacted without significant changes. The Bill can be found here.


The most significant tax headline for non-U.S. investors regarding the Bill is the lack of changes to the top tax rates of corporations, individuals, and estates. Prior bills in Congress in 2022 included changes to tax rates. The federal corporate income tax rate on corporations is currently 21 percent.


The most significant tax revenue generator in the Bill is a 15 percent minimum tax on large corporations. The 15 percent corporate minimum tax is not expected to impact most small and midmarket businesses in the U.S. The 15 percent corporate minimum tax would apply to corporations that meet an average annually adjusted financial statement income test. The test is met when the average 3-year annually adjusted financial statement income exceeds $1 billion USD and other requirements. 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.



Other revenue generators of the Bill include changes to the carried-interest rules related to investment funds and increased tax enforcement from the U.S. Internal Revenue Service.


Please contact International Capital Associates, LLC if you need tax advice regarding inbound tax planning  and structuring or U.S. investment tax reviews.

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 .