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2015 Tax Extenders Bill: Some Certainty & Changes for U.S. International Tax

December 21, 2015

The passage of the Protecting Americans From Tax Hikes Act of 2015 (“Tax Extenders”) by Congress provides some amount of long-awaited certainty, as well as some important changes, to U.S. international taxation of various types of taxpayers.

The passage of the Protecting Americans From Tax Hikes Act of 2015 (“Tax Extenders”) by Congress provides some amount of long-awaited certainty, as well as some important changes, to U.S. international taxation of various types of taxpayers. We have highlighted a few of these tax extenders below.

International Tax Extenders:

  • Extension through year 2019 of look-through rule for payments between related controlled foreign corporations.
  • Permanent extension of subpart F exception for active financing income.
  • Permanent extension of exemption for Regulated Investment Companies (RIC) interest-related dividends and short-term capital gains dividends.
  • Dividends from RICs and Real Estate Investment Trusts (REITs) no longer treated as dividends from domestic corporations for purposes of the dividend-received deduction.
  • Foreign Investment in Real Property Tax Act (FIRPTA) Related Items:
    • Increase of withholding rate applied to dispositions of US real property interests, with limited exceptions, from 10% to 15%.
    • Ownership threshold for foreign shareholders of certain publicly-traded corporations for purposes of FIRPTA exemption raised from 5% to 10%.
    • Permanent extension of treatment of a RIC as a qualified investment entity for purposes of FIRPTA withholding with respect to dispositions of US real property interests by foreign persons.
    • Exclusion from FIRPTA of any U.S. real property interest held directly by a qualified foreign pension fund, including an entity which interests are entirely owned by the fund.
    • RICs or REITs no longer excluded from definition of US Real Property Interest.

If you have any questions about how these changes to legislation may affect you, please contact a member of the KLR Global Tax Services Team.

For more on the PATH Act and the additional tax extenders signed into law, read our blog: Just In: President Signs Tax Extenders Into Law.

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