Global Minimum Tax Incentive Rules Threaten US R&D Investment

Unfavorable treatment of the highly lucrative US R&D credit under the global minimum tax is threatening to expose American companies to higher taxes and prompting some to rethink new investments in the US.

The US credit—which is worth hundreds of millions of dollars of tax reduction for some companies—would subject US businesses to large amounts of top-up tax by foreign governments, even when operations are on US soil, practitioners and industry groups warn.

“Our modeling shows that there is a significant amount of income that is exposed to top-up tax,” said Danielle Rolfes, partner in charge at KPMG’s Washington National ...