Below is an update on the passage of the GOP tax bill from SIIA senior director of public policy, David LeDuc.
Congress has concluded their work on the milestone Republican tax reform package and President Trump has signed it. The centerpiece of the $1.5 trillion tax package is the corporate tax rate reduction from 35% to 21%, providing substantial tax breaks for businesses.
As we have reported previously, a critical issue for SIIA members was our goal to retain the deductibility of advertising expenses. This issue was raised during many previous tax reform debates, and we are pleased to report that with this bill finalized, advertising deductability will be left unchanged. This conclusion reflects significant lobbying efforts by SIIA and our industry partners in the media and advertising industries.
In addition to the substantial rate reduction, the legislation reflects many reforms that will be beneficial to SIIA members. Following is a summary of key corporate tax provisions:
A detailed analysis of the legislation, including both corporate and personal tax provisions, is available here, provided by our friends at Deloitte.
- Creation of a participation exemption system by giving corporations a 100 percent dividends-received deduction for dividends distributed by a controlled foreign corporation (CFC). As a transitional measure to this new system, the measure imposes a one-time deemed repatriation tax, payable over eight years, on unremitted earnings and profits at a rate of 8 percent for illiquid assets and 15.5 percent for cash and cash equivalents.
- Expansion of the current limits on interest deductibility for certain companies, including business interest income.
- Modification of bonus depreciation measure, allowing for full expensing of qualified property placed into service after September 27, 2017, and before January 1, 2023.
- Retention of the R&D tax credit, including software development expenditures to be treated as research or experimental expenditures.
- Repeal of the corporate alternative minimum tax for tax years beginning after December 31, 2017, as well as refundability on any AMT credit carryovers through 2021.