One of the most significant changes under the TCJA is the permanent reduction of the top corporate U.S. federal income tax rate from 35% to 21%, the lowest corporate tax rate in the United States in almost 80 years.
In addition, the TCJA eliminated the corporate alternative minimum tax. These changes should result in immediate benefits to non-U.S. based multinational groups with significant U.S. operations in the form of increased after-tax returns and, depending on the particular operations of a group, these changes to the U.S. corporate tax regime may make the United States a much more attractive option for conducting business going forward.
These changes may also influence the structuring of mergers and acquisitions by making inversion transactions (i.e. transactions to relocate a company to another tax juristiction) less compelling and increasing interest in structuring transactions as asset purchases instead of as stock purchases. U.S. corporations may also be incentivised to dispose of non-core assets in light of the reduction in tax cost on any gain on such dispositions.