US reveals tax regulations for firms with over USD1B annual profit
Date
9/15/2024 4:10:30 AM
(MENAFN) On Thursday, the US Treasury Department introduced proposed regulations for the Corporate Alternative Minimum Tax (CAMT), targeting tax avoidance practices among companies with annual profits exceeding USD1 billion. The new rules are designed to enhance tax fairness by addressing significant tax avoidance strategies employed by some of the largest and most profitable US corporations. This move is part of implementing provisions from the Inflation Reduction Act aimed at ensuring that these high-profit companies contribute a fair share of taxes.
According to the Treasury Department, it is anticipated that approximately 100 of the largest and most profitable companies will be subject to the CAMT each year. These corporations, under the current tax system, would have typically paid an average effective federal tax rate of just 2.6 percent. The proposed rules highlight that about 60 percent of these companies would otherwise have reported an effective tax rate below 1 percent, with 25 percent potentially paying no federal income tax at all.
The Treasury Department's announcement underscores the problem of major corporations using tax preferences and aggressive planning strategies to significantly reduce or eliminate their tax liabilities. By implementing the CAMT, the Treasury aims to counteract these practices and ensure that these corporations contribute more equitably to federal tax revenue.
The new minimum tax rule is projected to generate over USD250 billion from the most profitable companies over the next decade, with an estimated USD20 billion expected to be collected in 2025 alone. This initiative represents a significant step towards addressing the tax inequities prevalent in the current system and enhancing overall tax compliance among the nation's largest corporations.
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