U.S. Homeland Investment Act Revived Under Tax Bill
The Homeland Investment Act (HIA) is expected to pass through the U.S. Congress as part of House Ways and Means Chairman Bill Thomas’s International Tax Bill, having been bumped off the Jobs and Growth Tax Relief Reconciliation Act last month. The bill proposes to reduce, for one year, the applied tax rate to excess qualified foreign distributions from 35 percent to 5.25 percent. If passed, the bill is predicted to prompt a US$ inflow in excess of $200m. Some estimates have put the figure closer to $800m, due to an expected increase in offshore borrowing by corporates in anticipation of the legislation. Due to the controversial nature of other parts of the International Tax Bill, the HIA is now unlikely to become law before 2004. The bill is likely to contain an attempt to resolve the dispute between the EU and U.S. over the U.S. Extraterritorial Income regime (ETI), which as been ruled against by the World Trade Organisation as an unfair trade subsidy to U.S. exporters.