Tax Reform: Hurts So Good?
New tax law could bring brain pain before companies figure it all out.
Tax reform passed at the end of 2017 gives big benefits to corporations and especially multinationals. However, tax and treasury departments face major headaches on how to apply the hastily produced law.
Although the idea of tax reform has been discussed for years, the Republican-led Congress produced the major legislative package—the Tax Cuts and Jobs Act—in seven weeks, and President Trump signed it into law on Dec. 22, 2017. The unprecedentedly quick process has resulted in a law creating interpretative uncertainties and potentially unintended consequences. Read more here.
It’s a melding of the acronyms. SWIFT recently announced it has reached an agreement with SAP to allow corporate clients of the business-software giant’s S/4HANA ERP offering direct access to the global messaging service’s vast network of banks, without intermediaries or the operational challenges of an in-house solution.
Depending on the complexity of the corporate customer, connecting to SWIFT directly or via a service bureau can take between three and 12 months. Under the agreement with SAP, its S/4HANA customers essentially have immediate access to the messaging network to connect with more than 11,000 banks worldwide. Companies can choose between an embedded connection to the SWIFT network, and bank connectivity through their usual banking partners. Read more here.
Meanwhile, the leveraged debt market shows signs of approaching the later stages of the credit cycle, but the trend in recent years toward looser debt covenants should give borrowers more flexibility and time to manage their debt obligations.
Looser terms combined with the surge in refinancing activity in 2016, which extended borrowers’ maturities at historically low rates, will soften the blow for leveraged borrowers during the next contraction of the credit cycle, according to a recent report by Fitch Ratings. Read more here.
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