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Global Tax Planning for a U.S. Multinational Lester Ezrati November 29, 2010

Global Tax Planning for a U.S. Multinational Lester Ezrati November 29, 2010. Tax Planning Strategy. Minimizing global taxes (Cash and ETR) in the long term, while Optimizing cash, Within the company’s global business strategy. Minimize U.S. and Local Country Taxes.

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Global Tax Planning for a U.S. Multinational Lester Ezrati November 29, 2010

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  1. Global Tax Planning for a U.S. MultinationalLester EzratiNovember 29, 2010

  2. Tax Planning Strategy • Minimizing global taxes (Cash and ETR) in the long term, while • Optimizing cash, • Within the company’s global business strategy

  3. Minimize U.S. and Local Country Taxes • In country permanent savings • U.S. • Domestic production activities §199 • Meals and entertainment • Amortization of purchased intangibles • State and local tax planning • Credits • Other permanent items

  4. Minimize U.S. and Local Country Taxes • Non-U.S. • Credits • Basis step-ups • Incentives • Consolidation, fiscal unity • Loss utilization • Withholding taxes • Timing vs. foreign tax credits • Holding companies • Recognizing losses

  5. Minimize U.S. and Local Country Taxes • Location of Earnings • Deferral • Supply-chain management • Location of intellectual property • purchased • self-developed • Global Services Company • Shared Services • Captive Insurance

  6. Optimize Foreign Tax Credit (“FTC”) Utilization • Maximize FTC limitation • Maximize foreign source income • royalties vs. services • contingent IP sales - §865 • Minimize foreign source expenses • R&D vs. other types of expenses • Regs. §1.861-8 • Bunching of Income • Income acceleration • prepayments • sale of assets • §351 transactions with boot

  7. Optimize Foreign Tax Credit (“FTC”) Utilization • Maximize Creditable Taxes • FTC Baskets • §901 vs. §902 FTCs • §902 tiers • Holding Companies • Deficit Companies • Small Dividends/Large FTCs • Factoring • Consolidated Returns • Partnerships • Local country taxes vs. U.S. E&P mismatch

  8. Optimize Utilization of Offshore Cash • Deferral • Use of holding companies, partnerships and the CFC look-through rule [§954(c)(6)] to move cash • Cash pooling companies • Non-U.S. acquisition even if parent stock is the consideration • Inter-company financing

  9. Optimize Repatriation of Offshore Cash • Investment in U.S. property planning - §956 • Sales of IP • Reorganizations • Prepayments

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