2017 TAX LAW IMPACTS FOR MINING COMPANIES WITH FOREIGN OPERATIONS

摘要

Under the former tax regime, most companies structured their overseas operations as foreign subsidiaries. Operating through foreign subsidiaries allowed companies to take advantage of the ability to defer recognition of income, perhaps indefinitely. This benefit, however, came at great costs. The foreign subsidiary may have had host country formation, maintenance and compliance costs greater than what would have been incurred by a branch. The U.S. costs of maintaining a foreign subsidiary generally exceeds that of operating a branch because of increased recordkeeping and compliance responsibilities. The tasks of managing foreign tax credits, timing repatriations, and avoiding negative consequences of Subpart F associated with foreign subsidiaries are complex and can create uncertain tax positions. Under the new tax regime, deferral is no longer a benefit and companies should examine whether the overall cost of foreign operations can be reduced by operating through branches rather than foreign subsidiaries.