A New Multinational Financing Frontier? Recent US Tax Guidance Opens New Avenues of Foreign Credit Support for Certain US Borrowings at an Uncertain Cost

Partners Jill Bronson and Sean FitzGerald authored an article for TSL Express titled “A New Multinational Financing Frontier? Recent US Tax Guidance Opens New Avenues of Foreign Credit Support for Certain US Borrowings at an Uncertain Cost.”

The enactment of the Tax Cuts and Jobs Act (the “TCJA”) introduced fundamental changes to U.S. tax law that immediately affected the structuring, terms and implications of financing arrangements. Although the TCJA’s initial effects were significant, the prospect of future material changes also existed in the form of implementing guidance. True to that promise, recently finalized regulations (the “Regulations”) promulgated under Section 956 may have the most dramatic effect yet on financing arrangements involving multinational companies.

While the Regulations open new possibilities for credit support and more flexible financing arrangements for certain international borrowers, partners Jill Bronson and Sean FitzGerald write that the Regulations have opened a Pandora’s box of issues in doing so, as the Regulations raise novel material tax and nontax issues that will need to be analyzed in the context of not only future facilities, but also certain current ones.