January 16, 2018
With the recent overhaul of federal tax law, companies are now working to understand how the changes will affect them. The Tax Cuts and Jobs Act includes such provisions as a lower corporate tax rate, immediate expensing of certain capital expenditures, a one-time repatriation toll charge for earnings and profits held overseas, increased limitations on interest deductibility and other complex rules.
The effects of the new tax law will extend much farther than the tax department, reaching deep into a company’s functions and responsibilities. While understandably having an impact on financial reporting, the changes also will influence mergers, acquisitions, other deals, international provisions, and the ability to accelerate deductions for capital investments, and the interest deductibility limitations will affect different industries in different ways.
Companies need to assess these impacts in a timely manner – not only to comply with regulatory requirements but ensure they aren’t missing new growth opportunities through deals. This effort must cross functions, with early and ongoing collaboration between the financial reporting, tax and corporate development groups.
More details on the impact of the tax changes are in US Tax Reform: A broader perspective on deals and financial reporting considerations. This report highlights key provisions and implications for valuations and other financial reporting matters, early perspectives on potential deal considerations, differences between International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP), and other issues, as well as suggested next steps for companies. You can also read more insights on tax reform from PwC Tax Services.