Reevaluating Your Global Tax Structure: What to Consider Under the OBBBA | Podcast

In this episode of Weaver: Beyond the Numbers, Vince Houk and Craig Epstein discuss how the One Big Beautiful Bill Act is reshaping global tax strategy. They explore why the U.S. is increasingly attractive for multinationals and the role of modeling in evaluating entity structures and elections, as well as key decisions around IP, excess production capacity and cross‑border operations. The conversation offers practical guidance on aligning tax and operational goals amid new law changes.

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Detailed Description of Reevaluating Global Tax Structure from the OBBBA

00:00:00
Vince: Welcome to Weaver: Beyond the Numbers — International Tax Edition. My name is Vince Houk, Partner-in-Charge of international tax.

And joining me today, I have Craig Epstein, fellow international tax partner. Today, we’re going to be discussing planning opportunities related to the One Big Beautiful Bill Act.

00:00:16
Vince: For this episode, we’re going to be focusing on reevaluating your global tax structure in light of the changes related to the One Big Beautiful Bill Act. I think what we’ve seen over the years — we had the 2017 Tax Cuts and Jobs Act, and now we have the One Big Beautiful Bill Act.

00:00:32
Vince: I think what we’re seeing with a lot of those provisions is that the U.S. is becoming a more attractive jurisdiction when you think about, globally, where should companies be putting their assets, including their IP? Where should they be putting excess capacity for their production? All those things.

And I think with some of the key changes we’ve seen under the One Big Beautiful Bill Act, I think the U.S. is very attractive.

00:00:58
Vince: And so, Craig, maybe you can just give us some of the highlights.

00:01:05
Craig: Yeah. The first thing is you’ve got export-related tax incentives (what was previously FDII and is now referred to as FDDEI). That’s really beneficial and can help reduce the effective U.S. tax rate on certain foreign-derived income, depending on the overall structure.

But when we’re talking about structuring, we’re really looking at it from a global tax perspective. I think that’s really important because that’s what shareholders and other stakeholders really care about.

00:01:24
Craig: What’s their overall tax footprint? We’re looking at this both from a U.S.-centric side that is looking to invest outbound, or conversely, like foreign investors or foreign owners that are looking to do business in the U.S.

And structuring is really important to really help drive, ultimately, I think, the decision on maybe modifying a structure. Operationally, it’s got to align — the tax side has to align with the operational requirements and investment requirements — but it helps drive the business decisions.

00:01:53
Craig: And the key components that we see are — well, think about entities, right? How do we treat that entity for tax purposes?

Do we want it to be a flow-through? Do we want it to be a corporate entity, both on the domestic as well as the foreign side, to have potentially a single layer of taxation or double taxation? We’ve got foreign tax credits and other, maybe potentially, treaties on cross-border transactions overlaying that.

00:02:16
Vince: And then all these new provisions under the One Big Beautiful Bill Act. So just another layer to look at when you’re considering this.

00:02:22
Craig: Exactly. And then on the foreign side, if you’ve got an outbound structure specifically, do you want to be in the controlled foreign corporation rules, which we’ve talked about in the past? Or do you want to make that entity a flow-through so that you’re not subject to those rules?

00:02:35
Craig: And then on top of that, specifically for individuals that are shareholders of a controlled foreign corporation, does it make sense? Do you have the high-tax exclusion, which is a really powerful benefit? Or can you make a 962 election?

Those are very fact specific — Section 962 elections.

00:02:51
Vince: Or if you’re an individual, should it be a flow-through, right? And some of that may depend on treaties, applications and all those different things.

00:02:58
Craig: Yes. And just on top of that, we’ve got: What are the repatriation requirements? What are the cash requirements within the structure, both for a parent entity as well as for a shareholder?

And try to manage and model around the potential tax leakage on that and try to minimize it wherever possible with available income tax treaties or other provisions to exempt that income from taxation.

00:03:22
Craig: And then I would say lastly, we’ve got transfer pricing as a really important component. You said you talked about maybe moving operations to the U.S. If you’re multinational, there’s going to be a transfer pricing element there.

And we’ve got to obviously follow the rules from an arm’s length perspective to help manage that.

00:03:39
Vince: Yeah. And I think the important overlay on all of that is modeling is going to be very important, right? You’re looking at it from all jurisdictions, and then you’re trying to layer in, from a U.S. tax perspective, all the recent law changes under the One Big Beautiful Bill Act.

00:03:54
Vince: But I think the key is to model it out.

I think with a lot of the changes we saw under the One Big Beautiful Bill Act, global companies must consider the U.S. in terms of can moving assets, risk functions, IP, excess production capacity, moving that to the U.S, can that lower the global tax footprint?

00:04:18
Vince: And I think in many cases, it can, right? And so it should definitely be part of that consideration when you’re looking at your global tax planning structure.

00:04:27
Craig: Yeah. There’s a lot of complexity there.

Like you said, I mean, I think putting it into a model, looking at realistic scenarios that are likely, and ultimately to help drive a business decision is ultimately what the objective is here.

00:04:40
Vince: Absolutely. Yes, I think modeling is going to be very important for companies as they evaluate whether or not to move assets, people, or functions to the U.S.

00:04:52
Vince: All right. Well, that concludes this episode.

Thanks so much for your time, catch us on the next one.

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