The last few years have held a bevy of tax changes that have reshaped the finance environment for many companies. Of particular note for finance leaders in 2024 is the Inflation Reduction Act. According to Partner Robert Lickwar, there are tax consequences of the Inflation Reduction Act, namely the corporate alternative minimum tax (CAMT) that went into effect in 2023.
The CAMT imposes a 15% minimum tax on the adjusted financial statement income of large corporations with average annual financial statement income exceeding $1 billion. However, Lickwar said the threshold becomes significantly less for companies with foreign operations—perhaps as low as $100 million. The regulations are still a work in process, according to Lickwar, and there are many adjustments to consider when getting from taxable income to financial statement income to consider, such as tax depreciation and tax retirement plan rules.
There’s also plenty to think about on the international front. Lickwar said he’s paying close attention to the Organisation for Economic Co-operation and Development’s 15% global minimum tax, of which more than 140 countries have joined.
“I can only imagine, in my wildest dreams, the country-by-country reporting—which has actually been here for a couple of years—about all of the income being sourced, the market based approach, etc.,” Lickwar said. He added that executives of impacted companies need to discuss how they’re going to handle this reporting, “which probably is going to be a lot of work".
Read the full article published by CFO Brew.
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