Post Tax Reform Compliance Health Check-up
Keep your tax compliance function healthy and up to date
A KPMG tax compliance check-up can help keep your tax compliance system healthy, up-to-date, and able to meet tax reform and regulatory requirements.
The 2017 tax law, commonly called the Tax Cuts and Jobs Act (or TCJA), made many far-reaching changes that have a significant impact on businesses in terms of data gathering, reporting requirements, and tax return filings. The tax law includes new compliance and reporting rules that affect companies with cross-border operations or that engage in financial transactions with foreign entities.
A KPMG health check-up can help ensure that your organization is meeting post tax reform compliance requirements.
Ongoing insights from KPMG about TCJA to help make staying abreast of developments easier
Ongoing insights from KPMG about TCJA to help make staying abreast of developments easier
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KPMG's check-up process includes the following steps.
Step 1
Identify the areas where tax reform rules may affect your tax compliance strategy and systems
Step 2
Evaluate the calculations needed to help satisfy new filing requirements
Step 3
Identify the data needed to perform these calculations (both from internal sources and external sources, such as joint venture partners, portfolio companies, and investments)
Step 4
Assess which KPMG personnel and technical resources (technology, D&A software) are best suited for your helping your company meet its compliance needs
Step 5
Perform a gap analysis to help determine your company’s current compliance status and make recommendations where remediation may be required
The final step is ongoing follow up to help your company remain compliant in a post-reform era.
A check-up can help address these potential tax issues.
New reporting requirements and potential compliance issues fall into several categories, including:
Deductions
Identifying and substantiating business deductions: Additional data gathering may be needed to claim business interest, net operating loss, travel and entertainment, and executive compensation deductions as well as accelerate depreciation.
BEAT
Base erosion and anti-avoidance tax (BEAT) calculations: The BEAT is a new, highly complex additional tax that may be imposed when certain deductible payments, such as interest, royalties, payments for services, and management fees, are made to foreign affiliates. The BEAT may also come into play when depreciable or amortizable property is acquired from foreign affiliates.
FDII
Foreign-derived intangible income (FDII) deductions: Under the new FDII rules, a deduction (and therefore a reduction in tax) may be available when goods or services are provided to foreign customers. Non-obvious flows that qualify for FDII may exist and should be identified.
GILTI
Global intangible low-taxed income (GILTI) calculations: The subpart F rules of prior law were expanded so that additional (GILTI) income must be included by certain U.S. shareholders of controlled foreign corporations. The U.S. tax liability on these amounts may be higher than expected due to the interaction of foreign tax credit rues and the allocation of expenses such as interest.
SALT
State and local tax (SALT): The tax reform law has varying impact upon SALT calculations and return filings (e.g., whether states follow the federal 100 percent bonus depreciation rules).
The path to compliance
How KPMG can help you
KPMG professionals work with clients to find efficient approaches to address TCJA provisions. We also help our clients perform transaction analysis and modeling that reflect the new limits on interest expense deductions, net operating losses, and executive compensation, as well as the new depreciation rules.
Then, we conduct a gap analysis and due diligence planning so that our clients that have foreign entities, conduct business internationally, or receive income generated outside of the United States can comply with the TCJA’s international tax provisions.
We supplement our health check approach with industry-leading technology and innovation capabilities, which include intelligent automation and software platforms that have been updated to account for tax reform’s additional reporting requirements. KPMG’s international tax reform analyzer (ITRA) factors in the potential impact that key international tax reform provisions will have on a client, and allows us to model and prioritize various planning scenarios.
