Global foreign direct investment (FDI) fell by 41% in the first half of 2018, to an estimated $470 billion from $800 billion in the same period in 2017 – mainly due to large repatriations by United States parent companies of accumulated foreign earnings from their affiliates abroad following tax reforms – according to figures released by UNCTAD today.
Global foreign direct investment fell by 41 percent to about $470 billion in the first six months of 2018 compared to the same period last year, mainly due to US companies’ repatriations of foreign earnings, the UN Conference on Trade and Development (UNCTAD) said Monday.
“Global foreign direct investment (FDI) fell by 41% in the first half of 2018, to an estimated $470 billion from $800 billion in the same period in 2017 – mainly due to large repatriations by United States parent companies of accumulated foreign earnings from their affiliates abroad following tax reforms,” the UNCTAD said.
In December 2017, US President Donald Trump signed into law Tax Cuts and Jobs Act (TCJA). Under the previous legislation, US companies could postpone US taxation on foreign profits as long as the money was being reinvested in their operations abroad. At the same time, when they did bring back the earnings, it was under 35 percent tax rate.
Under the TCJA, US companies have a one-time opportunity to repatriate foreign earnings at the tax rate as low as 8 percent for real estate and hard assets investment and 15.5 percent for cash and cash equivalent profits.
