Heads Up on unremitted foreign earnings

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02 Nov 2004

The latest edition of the (PDF 103k) from Deloitte (USA) is of interest globally.

It is devoted to the American Jobs Creation Act of 2004, the first major broad-based restructuring of US business taxes since 1986. The Act gives multinational companies a limited, one-time tax incentive to repatriate up to 85% of their foreign earnings tax-free. Accounting implications may include:
  • A need to recognise deferred tax and tax expense in 2004 on the planned repatriation in 2005.
  • For companies that have provided deferred taxes on unremitted earnings, consideration of the 85% deduction likely will reduce the deferred tax liability.
  • The timing of recognising tax expense or benefit could be complicated by the Act's requirements to have specific plans for reinvesting the undistributed earnings.

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