Taxand USA highlights several aspects of proposed tax reform measures that may have an impact on the relative value of the US dollar and, as a result, your financial statements.

 

You may already be modeling out the tax impact on your company’s financial statements of various tax reform scenarios, just as we have been doing for a number of our clients.

 

In addition to the impact that tax reform might have on your company’s effective (as well as cash) tax rate, the conventional wisdom among economic experts seems to be that tax reform will also have a significant impact on foreign currency exchange rates (i.e. on the value of the US dollar). Thus, it may also be important for your modeling to address the impact on your company’s financial statements of selected assumptions as to potential changes in FX rates.

 

Discover more: FX rate impact may trump tax rate impact

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Taxand's Take

Regardless of whether border adjustments are included in tax reform legislation, it appears likely that tax reform could have a number of significant effects on the value of the dollar. In any event, the moral of the story here is that in addition to modeling out the impact of tax reform on your company’s effective tax rate, it may also be prudent for you to model out the impact of a few selected assumptions in regard to the impact of tax reform on FX rates as we have done for some of our clients.

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International Tax | USA

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