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U.S. Tax — Recent shifts signal new concerns for Canadian companies

U.S. tax shifts: New concerns for Canadian companies

New webinar provides tax planning tips for companies doing business in the United States


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Canadian companies considering expanding their activities to the United States should be ready to navigate an evolving tax landscape. Over the last few years, the United States has made significant changes to its tax rules, including passing U.S. federal tax reform. Further, most states have enacted tax changes in response to the U.S. Supreme Court's decision in Wayfair. It's important that Canadian businesses keep up with all of the latest U.S. tax amendments to ensure they are meeting their tax obligations on both sides of the border.

Most significantly, many Canadian companies are affected by the U.S. tax reform in late 2017, most of the provisions of which took effect in 2018. Among other changes, these amendments decreased the federal corporate income tax rate to 21% (from 35%) and substantially expanded the previous earnings stripping rules that applied to interest paid to foreign related parties. The U.S. also introduced a "base erosion anti-abuse tax" (BEAT) that targets certain deductible cross-border payments made by certain U.S. corporations to related parties and operates as a minimum tax if it applies.

In addition, most U.S. states have introduced "economic nexus" tests following the Supreme Court's decision in Wayfair. As a result, vendors that are not resident in a state and that do not have "physical nexus" still have to register and account for state sales and use taxes that arise from certain remote sales made to purchasers in affected states. In particular, vendors must satisfy the relevant states' tax collection, compliance and documentation rules.

To help you understand the federal and state tax compliance responsibilities that your company will face in the U.S. market, and explain ongoing transfer pricing and customs concerns, KPMG presents "How are legislation changes, U.S. Tax reform and Wayfair impacting the way business is done in the U.S?", the latest webinar in KPMG's US Tax on Demand series. Other upcoming webinars in this series will focus on additional important tax-related areas of your business.

Information is current to December 17, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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