Tax Reform Still a Hard Nut to Crack
Tags: BREXIT, cyberthreats, e5 Solutions, IBORs, ISDA, iTreasurer, Libor, repatriation, SAP, Subpart F income, talent management, tax reform, technology
This month’s issue of iTreasurer dedicates more than a few pages to tax reform. That’s because despite its passage, the Tax Cuts and Jobs Act of 2017 still has a few wrinkles to iron out or, in the case of the story on page 1, a lot of spaghetti to unravel. We also take a quick visit to Dublin to provide a quick snapshot of the SAP treasury management conference that took place there in early July. We also take a look at the evolution of a cloud-based systems implementation provider. Along the way we look at IBORs, ISDAs and tax evasion.
First up, repatriation. Bringing trapped cash home sounds great to companies, but there are a lot of unknowns. That’s why the new tax rules are likely to keep tax and treasury departments busy over the next few years. And the unprecedented pace of the process resulted in a law creating interpretative uncertainties and potentially unintended consequences. But what’s for certain, according to NeuGroup peer research, is that most of the cash is going to buying back stock.
In our Anticipated Exposures section, we take a look at corporate readiness for the end of IBORs, particularly the scandalized Libor. With support potentially ending for global IBORs in just three years, while a broad array of market participants indicate some awareness of initiatives to adopt a new risk-free benchmark, only a tiny percentage have done anything about it. Also, with Brexit underway, the International Swaps and Derivatives Association is readying itself for any legal fallout with French and Irish ISDA master agreements. Currently companies can choose to use English, New York or Japanese law to settle international derivatives disputes.
On page 6 is an update on the recent SAP treasury conference in Dublin. The conference was pertinent to a variety of maturities in terms of where companies find themselves on the SAP platform timeline. “Companies using SAP find themselves along a spectrum that ranges from early versions of its ERP to the ever-evolving S/4HANA,” writes contributor Anne Friberg. “Where they stand depends on when they implemented SAP and whether they have an installed, on-premise version or use a private or public cloud (SaaS).”
The featured peer group summary this month is from the Treasurers’ Group of Thirty Large-Cap Edition meeting, which was held at Starbucks HQ in Seattle. Large-cap treasurers continue to grapple with the implications of tax reform, as well as cyberthreats, talent, technology and how it will change the role of treasury.
On page 11, NeuGroup Advisory Board member Peter Connors, of Orrick, Herrington & Sutcliffe LLP, and his colleague Joshua Emmett take an in-depth look at the new tax laws, particularly the treatment of passive income or Subpart F income. “Subpart F income is includable as ordinary income,” write the authors. “Until the enactment of recent tax reform legislation, if income of a CFC was not Subpart F income, the US shareholders did not have to include it when calculating their income for the current year, and the tax was effectively deferred. This has changed.”
Finally on page 14-15, contributor John Hintze discusses the newly rebranded e5 Solutions, which, after being acquired by Germany’s Hanse Orga Group, now goes by Serrala and offers more than SAP, e5’s previous single implementation services offering.
Enjoy the issue.
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.