Session 6. Staking new ground: exploring a potential territorial system of taxation

Session 6 of the Annual Tax Policy and Practice Symposium explores the effect on companies subject to the potential changes and how they manage the risk. What is in the air is a discussion of a switch to a pure territorial system. The rest of the world generally has tax systems that look very different than ours and look different in a way that puts U.S. companies in a relatively uncompetitive environment and makes the U.S. economy a relatively unattractive place to invest. The administration has proposed interest deduction pooling, FTC pooling, anti-intangible transfer proposals, and targeted changes like the reinsurance premium deduction disallowance. There are several countries which have territorial systems, no significant base erosion proposals that also offer patent boxes for certain qualifying IP income. Even with significant foreign tax credit coverage, companies still face a U.S. tax system that is less favorable than the tax system in which the principal foreign competitors are headquartered.