Amends existing law to revise the taxation of a corporation's foreign income, to increase the deduction from Idaho taxable income for foreign dividends, and to remove language regarding certain conditional water's-edge corporate reporting requirements.

This trailer bill to H 463 creates better consistency in policy between worldwide and "water's edge" filing methodologies. Historically, the U.S. federal tax system has partially double-taxed foreign earnings, and Idaho also partially double-taxed foreign earnings using a more simplified methodology (for water's edge filers)soIdahowouldconformtofederallaw. Thefederalsysteminnolongerdoubletaxingforeignearnings in order for U.S. multinational companies to be competitive with non-U.S. companies. This bill creates conformity to the new federal law to keep Idaho multinational companies competitive. Additionally, the majority of states historically do not double-tax foreign dividends, and currently Idaho is notcompetitivewiththoseotherstates. LegislativehistoryinIdahofrom2004allowedareducedleveloftax on foreign dividends. The 2004 repatriation act allowed companies the option to repatriate with a federal double-tax burden. The new law requires federal tax on all unremitted earnings, with a similar reduced federal double-tax burden. This bill follows Idaho's own legislative historical precedent and provides for discounteddouble-taxonhistoricalearnings. IfIdaho'staxlawmaintainsthestatusquo, itwillbepenalizing these companies with incremental double-tax liabilities compared to historical levels, so this bill resolves that double-tax issue. Finally, thenewFederalForeignDerivedIntangibleIncome(FDII)provisionsprovidea"booster"deduction to incentivize U.S. companies to manufacture domestically, rather than manufacture offshore. This bill includes an adoption of this policy by Idaho as well.