Canadian companies that do business in the United States and U.S. individuals living in Canada should be aware of new U.S. tax changes that may be on the way. The U.S. House of Representatives has approved new tax legislation that proposes to introduce a new 15% corporate alternative minimum tax for certain large corporations, limit business interest deductions, and change the effective tax rates for global intangible low-taxed income (GILTI), foreign derived intangible income (FDII) and the base erosion anti-abuse tax (BEAT), among other changes. These amendments are proposed in the United States’ “Build Back Better Act” legislative effort.

Now that the bill has been approved by the House, it moves to the U.S. Senate where further changes are expected. In the United States legislature, passing new tax rules can take considerably longer than in Canada. Before these rules are enacted, identical versions of U.S. tax legislation must be passed by both the House and the Senate, before it is presented to the President for signing. Thus, where the Senate amends the bill, it would then return to the House for passage. Given the Democrat’s narrow control of both houses of the U.S. Congress, this bill faces additional legislative challenges before enactment.

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