A new US holiday

13 October 2004 By Robert Cyran Follow @rob_cyran

Hundreds of billions of dollars in retained earnings could return to the US under a new tax holiday. With overcapitalised pharma companies among the biggest winners, expect some hefty returns of capital to investors.

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The US Senate has passed a oneyear tax break on the repatriation of assets held overseas by American corporations. The bill, called the American Jobs Creation Act of 2004, reduces the tax on repatriated earnings from 35% to 5.25% in the 2005 tax year.

Unlike most countries, the US taxes income earned both domestically and abroad by Americanbased companies. But these earnings are exempt from US taxes if permanently left overseas.

President Bush is expected to sign the bill into law this week.

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