It is important to keep in mind about the new tax laws for 2018?
As a business owner, it is important to keep in mind about new tax laws now that the year is coming to an end. Not only with the tax laws changing, but staying informed about how Brexit is making an impact on the tax laws.
Under Section 179 of tax codes, the expensing provision allows capital investments of up to $500,000 for certain property to be taken as an expense deduction, rather than being depreciated break. Which was made permanent under the PATH Act passed at the end of 2015 that phases out for asset purchases above $2 million. (McCuller, JD, CPA).
To explain, if you can purchase or lease new hardware or software for your business, for example, you can depreciate half of the cost as part of “bonus depreciation.”
New partnership audit rules will be effective in 2018. This is where partnerships could be liable to the entity, as opposed to partner level for audit-related tax collections. This can have a significant impact on how partnership interests are valued and transferred.
Organizations, such as construction, software, manufacturing, wine, boat building and biotech, can qualify for R&D tax credit. Small businesses, now defined as having an average of less than $50 million in gross revenue over the prior three years, will be able to offset AMT with R&D credits generated after January 1, 2016. (Sanger, Tax Laws for Small Businesses, 2017).
The Affordable Care Act allows for small businesses that provide health insurance to fewer than 25 full-time employees to qualify for a small business tax credit of up to 35% to offset the cost of insurance.
Brexit
Briefing more about tax laws, Brexit has made a huge impact on tax law and the implications for companies doing business with and within the UK.
When it comes to indirect taxes, VAT, excises duties and other indirect taxes. VAT is a chargeable on most goods and service supplies within the EU. Custom duties on imports into the single market are also harmonized, and EU law prevents taxes being levied on the raising of capital. VAT forms a sizeable part of the UK’s tax intake and there will be little benefit in deviating EU-derived system. Which then US has indicated it might not seek separate UK agreements in the event of Brexit that could cause a negative impact on UK-US trade.
Direct Taxes is on company profit and capital gains. As tax rules will over time diverge from EU rules, taxation will inevitably become more complex for MNE’s (Multinational Corporations and Enterprises) that have group companies in both UK and EU. Although the UK will lose its protection against discriminatory tax measures being imposed by EU member states, putting at risk for commercial environment and the benefit for investors of locating intermediate holding companies in the UK.
With just such short notice, multinational companies should review and understand strategies on how they can use the remainder of the year Brexit notice period to derived firm contingency plans based on the emerging shape of the UKs relationship with EU.
Overall, it is significant to understand the implications and implementation of these laws along with the upcoming tax laws for the next year. It is highly recommended to seek out qualified legal counsel as you sift through your business’s next steps.
The attorneys at Bridge Law LLP will meet with you and help you determine how best to set up your company based on your business goals.
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*The information presented in this article does not constitute legal advice and is not intended to create an attorney-client relationship. The information presented in this article is not tax advice and you should consult a CPA or other qualified accounting and tax professional to discuss your specific circumstances.