The United States of America (USA) signed into law The Tax Cuts and Jobs Act (TCJA) in December 2017. TCJA took effect on 1 January 2018.

The introduction of this Act, which has some element of “territorial regime”, provided some reductions on the income tax rates and better exclusions for US resident individuals, trusts, estates and gifts. It also provided tax incentives for US-sourced business income for corporations.

The two speakers covered quite extensively the impact of the new Act on corporations, including dividends, transition tax, global intangible low-taxed income, foreign deemed intangibles income, based erosion and avoidance tax and CFC changes. They also took the attendees through various practical considerations when structuring to do business in the USA.

The takeaway points from the talk were:

  • Individual income tax rates remain in 7 brackets, but the top rate has been reduced from 39% to 37%.
  • Bracket for estate and trusts for top rate of 37% has been lowered to US$12,500, which means it is easier to reach the top rate.
  • Corporate tax rate has been reduced from 35% to 21%.
  • Dividends received from foreign subsidiaries by US corporate shareholders who owns at least 10% of that foreign subsidiary will be allowed 100% deductions. US individual shareholders will not have this benefit.
  • Analysis and advice should be sought to ensure the correct structure is done for US persons looking to invest outside of the USA or non-US persons looking to invest into the USA.

53 STEP members and non-members attended the talk.

Click HERE to view event photos.

Contributed by: 

Ms. Linda Wong

Managing Director, Kensington Trust Singapore Limited


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