Businesses will pay income tax on profits from their companies if they have the option to do so, but not if they don’t, under a new tax law that will begin in the first half of 2019.
The changes are aimed at helping the country’s largest corporations avoid tax on their overseas profits and could also spur companies to create and sell local jobs, according to the White House and Treasury officials.
The tax plan, which has been widely criticized for not being enough, also would apply to dividends and other capital gains earned overseas, and some of the new tax provisions will apply to all income.
The proposal is the latest in a series of moves by President Donald Trump and the White Houses administration to crack down on the countrys largest corporate tax evaders.
Trump’s tax plan also has little chance of being approved by Congress, though some Republicans are pushing for changes.
Some have already proposed a new federal tax code that would eliminate many of the corporate tax provisions and replace them with a flat rate for income.
Others have proposed a “border adjustment” tax that would allow businesses to deduct their foreign tax payments on their U.S. income tax returns.
The administration has said it wants to tax the income from those investments in the same way that businesses are taxed on their sales.
“There’s going to be a real tax reform effort on the horizon.
It’s not going to happen overnight, but it’s going the right way,” said Robert Zirkelbach, a law professor at the University of Michigan.
He said the tax changes would be more favorable for businesses that are not as large as many of Trump’s rivals.
The plan would also apply to the tax bills of companies with more than 100 employees, or to a company with more that 20 employees.
The new rules would also affect companies that are owned by foreign entities, such as a hedge fund or a company that has offices in the U.K. and Ireland.
In addition, the plan would allow certain U.N. tax-exempt organizations to deduct the taxes they pay from their U,S.
federal income taxes.
In some cases, these companies would be able to deduct them from their income tax bills.
The president, Treasury Secretary Steven Mnuchin and Treasury Secretary Mick Mulvaney will be at a White House press conference Wednesday to discuss the plan.
Trump has said the new rules could save the country $1 trillion over the next decade.
The White House says the plan will help U.s. companies avoid $4.6 trillion in additional tax bills, mostly due to the lower rate of corporate taxes.
The legislation also contains several other tax reliefs, including a tax credit for individuals to reduce their taxes.
Trump is also expected to sign a bill Friday that will allow the government to pay for tax cuts for companies that relocate abroad.
The House of Representatives is expected to vote on the tax overhaul package Thursday, and the Senate is expected in late-March or early-April to vote.
A Senate tax bill is expected late this week.
Businesses are likely to be more optimistic about the plan if it includes tax relief for businesses, Mulvane said Tuesday.
The Trump administration and the Treasury Department have said that the plan does not affect the ability of companies to bring back jobs from overseas, nor does it affect tax policy.
But many experts are skeptical that it will make much difference in the short term.
Trump, a former private equity executive, has frequently touted his tax cuts as helping companies and the economy.
“I’m not saying that I’m making all of the money, but if you look at what I’ve done, I’ve made a lot of money,” Trump told a crowd at a February campaign rally in Pennsylvania.
“And I know what I’m doing, and I know how to run a company, so I know I’m running a great company, and we’re going to make sure we make sure that we get that tax cut that we deserve,” Trump said.
The Associated Press contributed to this report.