Stock Buyback Tax Proposed Rules Spark Fears of Double Taxation

Concerns are rising about double taxation around the 1% stock buyback excise tax treatment on US subsidiaries of foreign parents, as countries around the world consider buyback taxes of their own.

Established in President Joe Biden’s 2022 tax-and-climate law better known as the Inflation Reduction Act, the tax can apply to foreign companies’ stock buybacks if those repurchases were funded with money from a US subsidiary.

The Treasury Department proposed a “funding rule” in initial guidance with a “per se” rule, that said any funding sent from a US subsidiary within two years of a parent’s stock repurchase would count ...