Implications of corporate repatriation on money markets

The repatriation of offshore corporate cash under US tax reform will not disrupt US or offshore money markets

Mar 6, 2018 | Matt Bubriski

The 2017 US Tax Cut and Jobs Act applies a “deemed” repatriation tax to help pay for the cost of lowering the corporate tax rate to 21%. Unlike the previous voluntary repatriation holiday under the Homeland Investment Act of 2004, the current law imposes a mandatory one-time deemed repatriation tax on unremitted post-1986 foreign earnings of 15.5% on liquid assets and 8% on illiquid assets, regardless of whether the assets are transitioned to US parents.

Companies can elect to pay the tax liability over a period of up to eight years in installments of 8% in each of the first five years, 15% in year six, 20% in year seven and 25% in year eight.

In this paper, we examine the possible implications for US and offshore money markets.
 

To continue reading, click Download PDF