The bill formerly known as the Tax Cuts and Jobs Act is likely to result in an influx of cash back to US corporate headquarters. But tax reform implications for the technology industry could extend far beyond finances. What else will technology companies need to consider about their value chains and market expansion as a result of these tax code changes?
Key considerations from the tax cut for the technology sector
One of the most transformative changes to the corporate US tax code in decades, the bill formerly known as the Tax Cuts and Jobs Act was signed into law on December 22, 2017. Not only has the corporate tax rate been reduced from 35 to 21 percent, but a one-time tax on earnings currently held overseas, as well as a shift (at least in name) away from a worldwide tax regime that allowed deferred taxation of foreign profits, is likely to result in an influx of cash back to US corporate headquarters. These changes may have implications for technology companies that extend far beyond their financial results. In fact, we may soon witness a tectonic shift in how US and non-US-headquartered companies assemble their value chains, in which jurisdictions they choose to perform research and development activities, and where they invest in organic and inorganic expansion.