New bill to impose 1 per cent tax on share buybacks and 15 per cent minimum corporate profit tax.
New legislation introduced by president Joe Biden includes a baseline tax on global corporate profits and a levy on share repurchases, tapping the brakes on one of the biggest drivers of US sharemarket performance over the past few years., which includes a host of measures to attempt to depress quickly rising prices. Within the law, there are two measures that will tax corporate profits.
Businesses that appear most vulnerable to drag on earnings from the bill would include those in the technology, communication services and consumer discretionary sectors, according to Bank of America. The levy on buybacks may prompt more companies to use the money they would otherwise allocate for repurchasing their stock to instead build new factories or upgrade equipment, boosting capital expenditure, known as capex.
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