U.S. tax reform: How it will impact Canadian businesses

USA - Canada map

U.S. tax reform is on the horizon.  A convergence of economic and political factors, including the apparent collapse of health care reform, are creating enormous pressure for bold tax changes.  While predicting the pace and direction of Washington is treacherous, recent key developments are bringing the shape and timetable of U.S. tax reform into better focus.  Perhaps most notably, key Republicans from the White House and Congress released a short mission statement for their “shared vision” for an overhaul of the U.S. tax code, announcing that the controversial border adjustment tax (BAT) will be abandoned as tax reform moves forward. The removal of the BAT element, which had polarized many and created tensions, sets the stage for more orderly progress. Much remains to be done, however. 

Far from being bystanders in this process, Canadian businesses are major stakeholders in U.S. tax reform. The Canadian economy is deeply integrated with the U.S. economy and paradigm shifts in U.S. taxation will hit the bottom lines of corporate Canada. The death of the BAT is a key, if not unexpected, development for Canadian businesses who had much to lose from that policy. However, even with the BAT’s elimination, the breadth and fundamental nature of other tax reforms that remain very much on the table will have a major impact on how Canadian cross-border business, deals and investments are done. 

While it is difficult to predict the precise impact U.S. tax reform would have in relation to the Canadian economy, we expect the impact will be profound and broad, reaching across all industries. These changes may well shift thinking, create new economic incentives and, for the prepared, create opportunity. That’s why it’s crucial for businesses to remain cognizant of updates in policy and keep thinking about how to position themselves and make informed choices in response to such a transformative event as tax reform.

Osler’s commitment to our clients is to support and collaborate with Canadian businesses going through this once-in-a-generation transition. While the tax reform process takes shape, we will keep you apprised of key developments and milestones. As substantive policy emerges, we will help translate what that policy means to Canadian businesses and investors. As legislation is enacted and phases in, we will share our insights and perspectives to help clients understand how their peers are adjusting, adapting and finding opportunity in this new environment.

We will keep this page updated as key events unfold so check back regularly.

Resources

U.S. tax change proposals anger builders, real estate agents, charities

CNBC - August 14, 2017

With U.S. Congress members focused during their August recess on finding ways to lower the corporate tax rate, industry groups and other sectors of society are gearing up to fight proposed changes to the personal income tax. Read more.


White House plans to release tax reform framework in September: sources

CNBC - August 11, 2017

The White House plans to release a brief document in early- to mid-September outlining a framework for overhauling the U.S. tax code, according to three sources familiar with the matter. Read more.


Factbox: Many pieces to tax reform puzzle for Trump, U.S. Congress

Reuters - August 10, 2017

President Donald Trump and congressional Republicans, fresh from their failed push to repeal Obamacare, are now tackling a project that has eluded Washington for 30 years - tax reform. Read more.


What real tax reform could be

The New York Times - August 8, 2017

Real tax reform would entail more than just cutting taxes, but the net result could be a fairer and more productive system, according to this New York Times editorial. Read more.


R.I.P. border adjustment tax: Canadian implications

Osler, Hoskin & Harcourt LLP - July 28, 2017

The hotly contested border adjustment tax (BAT) will not be included in U.S. tax reform, key Republican leaders from the White House and Congress confirmed on Thursday. While there is still rampant uncertainty about the shape that U.S. tax reform will take, the knowledge that this reform process will proceed without the BAT is a major step forward for Canadian businesses. Read more.


Canada pleased by U.S. decision to scrap border tax proposal

CTV News - July 28, 2017

Canadian officials praised a decision by the U.S. government to drop a contentious border tax adjustment proposal. Read more.


Trump, Republicans kill border tax plan

Toronto Star - July 27, 2017

U.S. President Donald Trump and Republican leaders in Congress have agreed to kill an import-tax proposal that the Canadian government opposed. Read more.


Retailers cheer the death of the border adjustment tax

CNBC - July 27, 2017

The retail sector welcomed the news of the elimination of the border adjustment tax amid concerns it would have raised customer costs on goods. Read more.


Tax reform plan sees U.S. import charges scrapped

Financial Times - July 27, 2017

Republican leaders have eliminated an import tax which would have hindered their ambitions to form a new U.S. tax system. Read more.


U.S. tax changes loom large over cross-border deals

Osler, Hoskin & Harcourt LLP - July 26, 2017

While the rollercoaster effort to repeal and replace Obamacare has claimed most of the attention in Washington over the past several weeks, there have been less publicized U.S. tax developments that may profoundly affect cross-border transactions and which Canadian businesses and investors need to be aware of. We provide a short summary of these developments. Read more.


U.S. tax reform: Key signals to watch for

Osler, Hoskin & Harcourt LLP - July 26, 2017

The political turbulence associated with the effort to repeal and replace Obamacare has obscured the direction and timing of U.S. tax reform. Here are a few key signals that we think Canadians should be looking for as they monitor tax reform south of the border. Read more.


Republicans getting pressure from big business to move on tax reform

CNBC - July 17, 2017

Washington’s most powerful business groups are pushing lawmakers to move forward with tax reform. Read more.


House speaker, Trump aides vow tax reform by end of 2017

Reuters Canada - June 20, 2017

Republicans from the Trump administration and from Congress pledged to complete an overhaul of the U.S. taxation system by the end of 2017. Read more.


U.S. taxpayers’ input sought on tax reform

Global Tax News - June 20, 2017

The Senate Committee on Finance has requested input from the public on potential options for U.S. tax reform. Read more.


U.S. tax reform coming this year, Mnuchin says during Ottawa visit

The Globe and Mail - June 9, 2017

Steven Mnuchin, U.S. Treasury Secretary, prioritized U.S. tax reform during a trip to Ottawa, which would in turn lead Canada to reduce its own tax rates. Read more.


House Conservatives ready to “go big” on tax reform that includes welfare reform

The Daily Signal - June 9, 2017

The House Freedom Caucus wants a tax reform package that will include welfare reforms but not a tax on imports or a border adjustment tax. Read more.


Top U.S. business lobby warns of ‘substantial’ risk if tax reform fails

Financial Times - June 6, 2017

A top lobby group in the U.S. says a failure to reform the tax system in the U.S. could inflict damage on the economy by upending hiring and investments by big companies. Read more.


U.S. executives tell Congress they want permanent tax reform

Reuters - May 18, 2017

Corporate executives pushed for lawmakers to pursue a permanent tax reform package that avoids expanding the federal deficit as a way to encourage economic growth in the U.S. Read more.


Treasury’s Mnuchin says he still hopes for tax reform this year

Reuters - May 18, 2017

Steven Mnuchin, U.S. Treasury Secretary, said he still believes the Trump administration can complete U.S. tax reform this year. Read more.


Mnuchin weaves in tax reform, with trade talk at G7 Italy

Fox Business - May 13, 2017

U.S. Treasury Secretary Steven Mnuchin reiterated the promise for tax reform in the U.S. while attending a meeting in Italy with G7 finance ministers. Read more.


U.S. House tax committee sets first hearing on tax reform

CNBC - May 11, 2017

The U.S. House Ways and Means Committee set a May hearing on the potential impact of U.S. tax reform on economic growth for the country. Read more.


With health care victory, House Republicans ready to tackle tax reform

New York Post - May 8, 2017

House Republicans are setting their sights on U.S. tax reform after a victory on their healthcare bill. Read more.


With Obamacare vote, House Republicans free to turn to tax reform

The Economic Times - May 5, 2017

The U.S. House or Representatives plans to turn to tax reform after concluding a lengthy healthcare debate led to the repeal and replacement of Obamacare. Read more.


What’s in the Trump tax plan that promises ‘massive’ cuts

ABC news - April 26, 2017

The White House unveiled its long-awaited new tax reform plan on Wednesday, that included major cuts in federal taxes for businesses, while simplifying rules for individuals. Read more.


Trump unveils ‘most significant tax reforms since 1986’, but experts skeptical

The Guardian - April 26, 2017

The Donald Trump administration unveiled what it referred to as the biggest tax cuts ‘in history’ in a move that will slash taxes for small and large businesses. Read more.


White House proposes slashing tax rates for individuals and businesses

New York Times - April 26, 2017

U.S. President Donald Trump’s administration proposed to reduce individual and corporate tax rates in his tax reform plan, announced on Wednesday. Read more.


Here’s what was missing from Trump’s tax plan that Wall Street really wanted

CNBC - April 26, 2017

Ahead of U.S. President Donald Trump’s announcement on U.S. tax reform, an administration official told Reuters the proposal would include a sharp reduction in the tax rate from 35% to 10% for repatriation of profits. Read more.


Donald Trump says long-awaited tax reform to be announced Wednesday

Financial Post - April 21, 2017

U.S. President Donald Trump’s administration is set to release a tax plan for individuals and businesses as early as Wednesday, which will contain the administration’s priorities and will reveal the administration’s position on the border-adjusted tax. Read more.


Treasury’s Mnuchin: We’re ‘pretty close’ to bringing forward ‘major tax reform’

CNBC - April 20, 2017

Treasury Secretary Steven Mnuchin says the Trump administration will unveil a plan for “major tax reform” “very soon,” after originally tempering expectations surrounding the expected timeline. Read more.


Trump: ‘We’re going to surprise you’ with speed of tax reform

CNBC - April 18, 2017

While Donald Trump’s top aides have tempered expectations for tax reform, Trump claimed his administration is “in very good shape” on the process. Read more.


U.S. admits Trump tax reforms will be hit by healthcare setback

Financial Times - April 17, 2017

U.S. Treasury secretary Steven Mnuchin says the target to get tax reform through Congress before August is “not realistic at this point.” Read more.


Trump to meet U.S. business leaders on infrastructure, tax reform

Reuters - April 10, 2017

U.S. President Donald Trump is meeting with two dozen chief executives to try and gain support for his infrastructure program and tax reform. Read more.


Trump administration back to square one on tax reform

Fox News - April 10, 2017

U.S. President Donald Trump’s administration is likely to miss the August deadline for a complete tax overhaul set out by Treasury Secretary Mnuchin. Read more.


Investors will be waiting ‘a long time’ for U.S. tax reform under Trump, professor warns

BNN - April 3, 2017

A university professor says U.S. President Donald Trump needs to show he can work with Congress before tax reform gets a green light. Read more.


U.S. markets shift focus to Trump’s tax reform plans

The Globe and Mail - March 26, 2017

After acknowledging defeat on the health care bill, U.S. President Donald Trump said Republicans would likely pivot to tax reform next. Read more.


U.S. tax reform plan could have currency spillover effect: IMF's Obstfeld

Reuters - Mar 13, 2017

International Monetary Fund chief economist Maurice Obstfeld says Donald Trump’s proposal to overhaul the U.S. tax code could have ripple effects on other economies. Read more.


Senate Republicans eyeing alternative tax reform plan

The Hill - Mar 12, 2017

Senate Republicans are eyeing other options to Speaker Paul Ryan’s tax reform package that includes a border adjustment tax. Read more.


Exclusive: Trump says Republican border tax could boost U.S. jobs

Reuters - Feb 24, 2017

Donald Trump praised a border adjustment tax being championed by Republicans in Congress as an avenue to boost jobs, but he did not specify whether he will endorse the proposal. Read more.


The U.S. “Big Border Tax”: A primer for Canadians

Osler, Hoskin & Harcourt LLP - Feb 16, 2017

Amid the swirling political winds of the early days of the Trump administration, there is growing speculation that the President may throw his support behind the House Republican Conference’s “Better Way” Blueprint (the Blueprint) for tax reform in the United States. Read more.


Trump to Fox News: I think tax reform will be done this year

CNBC - Feb 5, 2017

U.S. President Donald Trump told Fox News that tax reform — a key component in his presidential campaign will be implemented this year. Read more.


A note on the impact of Trump’s presidency on cross-border business

Osler, Hoskin & Harcourt LLP - Nov 10, 2016

The election of Donald Trump as U.S. President could have a profound impact on both U.S. and domestic foreign policy. One of the areas where we anticipate profound and early refocusing is tax policy. With republicans controlling the House of Representatives and the Senate, as well as the White House, the prospects for meaningful domestic and international tax reform are strong. Here we analyze the impact on Trump’s presidency on cross-border business. Read more.


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Key Contacts

Paul Seraganian

Paul Seraganian
New York Managing Partner
pseraganian@osler.com
212.991.2526

Jennifer Lee

Jennifer Lee
Partner, Taxation
jennifer.lee@osler.com
212.991.2597

David R. Hardy

David R. Hardy
Partner, Taxation
dhardy@osler.com
212.991.2563

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