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Foreign Subsidiaries of Multinational Businesses: GILTI, Hybrid Entities, Form 5492, and Recent Transfer Pricing Cases

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, July 8, 2021

Recorded event now available

This course will explore the tax difficulties faced by multinational companies with foreign subsidiaries. The panelist of veteran foreign tax professionals will discuss the compliance challenges these businesses face, including recent transfer pricing cases, Section 894(c) payments made by hybrid entities, and impending changes to the current foreign taxation regime.

Description

The 2017 Tax Act toughened taxation of foreign subsidiaries. Previously only repatriated earnings or Subpart F income was taxed; now Section 951A taxes GILTI at 10.5 percent. Recent transfer pricing challenges, inversion rules, and Section 894 (c) anti-hybrid provisions are only a few of businesses' challenges with foreign subsidiaries. The IRS challenged Coca-Cola's longstanding transfer pricing methods and won. Coca-Cola is appealing the decision.

To discourage inversion, newly inverted firms are subject to deterrents, including taxation of shareholders' dividends as ordinary income as opposed to qualified dividends or long-term capital gains. Sections 267A and 245A(e) disallow deductions for interest and royalties paid to related foreign entities using a hybrid structure. International tax practitioners must be aware of the many related party provisions to avoid or lessen their effects.

Listen as Raul A. Escatel, Senior Partner at Ascendant Law Group, explains the challenges facing multinational businesses with foreign subsidiaries focusing on avoiding penalties and reducing its overall tax burden.

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Outline

  1. Foreign subsidiaries
  2. Transfer pricing
  3. GILTI
  4. FDII, FDDEI, and related-party sales
  5. 864(c) anti-hybrid rules
  6. BEAT
  7. Form 5472
  8. Impending changes
  9. Best practices

Benefits

The panelist will review these and other critical issues:

  • How related party transactions qualify as FDDEI transactions under the final regulations
  • Action items for multinational companies from current transfer pricing cases
  • What transactions between related entities are required to be reported on Form 5472?
  • How would proposed legislative changes impact the taxation of multinational entities?

Faculty

Escatel, Raul
Raul A. Escatel, J.D., LL.M.
Senior Partner
Ascendant Law Group

Mr. Escatel brings extensive experience and close personal attention to the representation of businesses and...  |  Read More