New US Tax Provision Raises Cost Concern for Foreign-Owned Firms

Foreign-owned companies operating in the US want assurance that a new anti-abuse measure in Republicans’ 2025 tax law won’t result in bigger tax bills because of the way it interacts with other parts of the tax code.

The businesses want the IRS to say that certain payments like royalties, rents, and dividends between a new class of foreign subsidiaries—“foreign-controlled foreign corporations“—and other, related foreign companies aren’t subject to additional US tax.

For companies affected by the new provision, “the magnitude will be significant,” said Joshua Ruland, leader of international tax and transaction services at EY’s National Tax Department. ...