Legislative Environment

The first quarter of 2025 was marked by the back-and-forth over the Corporate Transparency Act (CTA) reporting requirements and a new External Revenue Service proposed to manage tariff revenue collection. Both are indicative of the uncertainty as the new government enacts its agenda.

There was plenty of activity around income taxes as well. Upon taking office, the Trump administration took action to freeze regulatory issuances and rescind rules submitted but not yet published so as to review all regulatory and agency actions before proposing changes.[1] In addition to regulatory review, there have been layoffs at the IRS heading into the busy season, but the impacts have yet to be seen. While other jurisdictions are working through how to implement Pillar Two, the U.S. has indicated that it will not be cooperative on this initiative.[2]

On Capitol Hill, House Republicans released a 10-year budget resolution blueprint that calls for an increase in the statutory debt limit of $4 trillion and provides a $4.5 trillion cap for tax cuts. The bill included an allocated spending reduction of $1.5 trillion but a mandatory $2 trillion reduction in spending. If that target is not met, the amount allocated for tax cuts would be reduced accordingly. Other allowable deficit increases total $300 million.[3] All committees are required to submit legislative recommendations to achieve their targets by March 27, 2025. The blueprint emphasizes key priorities of the Trump administration including lowering taxes and reducing federal spending.

Here are some of the key areas we are monitoring:

1. Reduction in Corporate Tax Rate: A reduction in the corporate tax rate would require companies to remeasure their deferred tax assets and liabilities at the new tax rate. This revaluation could result in a one-time adjustment to tax expense in the period of enactment, impacting the effective tax rate and net income.
2. Immediate Expensing of R&D Costs: Allowing immediate expensing for certain R&D costs would accelerate the recognition of tax benefits. Companies may need to reduce their deferred tax assets and current taxes related to capitalized R&D expenditures through the enactment date.
3. Bonus Depreciation: The reinstatement of 100 percent bonus depreciation for certain property would allow companies to immediately expense the cost of qualifying assets. This could lead to a significant reduction in taxable income in the year of acquisition, affecting both current and deferred tax calculations.
4. Renewable Energy Tax Credits: The renewable energy tax credits provided for by the Inflation Reduction Act (IRA) have been a target of Republican lawmakers in favor of tax incentives for traditional energy production. See our article covering this topic in more detail.[4]
5. Interest Expense Deduction Limitation: Changing the limit on the deduction for business interest expense to 30 percent of EBITDA instead of EBIT could increase the amount of interest expense deductible for tax purposes. Companies would need to reassess their deferred tax assets related to interest expense, potentially impacting their current tax position as well.
6. Reduced Enforcement Threat: Taxpayer-favorable changes in enforcement and interpretation of tax laws could affect the assessment and disclosure of uncertain tax positions. Companies may need to decrease reserves or adjust existing ones.

A&M TAS Says:
Changes in tax law should be reported in the period of enactment under ASC 740. Although not impactful in Q1 2025, potential law changes should be monitored closely as they can significantly affect how companies recognize and measure their income tax positions under ASC 740 throughout the year. If the corporate tax rate changes, companies will need to revalue their deferred tax assets and liabilities (DTAs and DTLs) accordingly in the period in which the change is enacted (i.e., signed into law by the President). For items under regulatory review, there is no recognition or remeasurement until new regulations are finalized or until existing regulations are officially removed.

Federal Tax Regulations

In Q1 2025, several new federal tax regulations have been introduced that may impact a company’s tax provision. Understanding these changes is crucial for companies to accurately adjust their tax positions and ensure compliance.

1. Base Erosion and Anti-Abuse Tax (BEAT) Proposed Regulations. The proposed BEAT regulations provide detailed rules on the calculation of the BEAT liability, including the identification of base erosion payments and the determination of the modified taxable income.
2. Cloud Computing Final and Proposed Regulations. The final and proposed regulations on cloud computing provide clarity on the tax treatment of transactions involving cloud-based services. These regulations address the characterization of cloud transactions as either leases or services, impacting how expenses are deducted and income is recognized. The proposed regulations also offer guidance on the allocation of costs and income between domestic and international operations.
3. Section 162(m) Proposed Regulations. The proposed regulations provide guidance on the definition of covered employees, the application of the deduction limit, and the treatment of performance-based compensation.
4. Disallowed Partnership Losses (DPL) Final Regulations. The final DPL regulations aim to curb tax avoidance by disallowing certain partnership losses that lack economic substance. These rules include stringent anti-avoidance measures to prevent taxpayers from using partnerships to generate artificial losses.
5. IRA Credits Final and Proposed Regulations. The final and proposed regulations on various IRA credits provide guidance on the availability and calculation of tax credits for investments in renewable energy and other qualified activities. These regulations clarify the eligibility criteria, the amount of credit available, and the procedures for claiming the credits.

A&M TAS Says:
The impact of final regulations should be accounted for in the period they are released (e.g., Q1 2025). When proposed regulations include reliance language, companies should consider their intent to follow these regulations. If a company intends to comply with the proposed regulations, it may need to adjust its tax positions and disclosures accordingly, even before the regulations are finalized.

Other IRS Guidance

In the first quarter of 2025, the IRS issued several important pieces of corporate guidance that, while not legally binding, provide valuable insights into the agency's current thinking on significant tax topics.

1. Excise Tax on Stock Buybacks (January 15, 2025). The IRS has issued initial guidance for the new excise tax on stock buybacks, which applies to publicly traded corporations. This guidance outlines the calculation of the excise tax and the reporting requirements for affected corporations.
2. Employee Retention Credit (ERC) Guidance (February 25, 2025). The IRS has updated its frequently asked questions regarding the Employee Retention Credit, providing additional clarity on what kind of government orders qualify a business or organization for the ERC.
3. Virtual Currency Transactions Guidance (February 25, 2025). The IRS has released updated frequently asked questions on virtual currency transactions, providing important information on the tax treatment of virtual currencies, including cryptocurrency. This guidance addresses issues such as the recognition of gains and losses and the reporting requirements for virtual currency transactions.
4. Prevailing Wage and the Inflation Reduction Act (March 10, 2025). The U.S. Department of Labor, in conjunction with the IRS, has published guidance on prevailing wage requirements under the Inflation Reduction Act.

A&M Tax Says:
This guidance helps taxpayers understand the IRS's interpretation and application of tax laws, aiding in both compliance and strategic planning. Although not authoritative, these updates offer direction on various issues, and companies should consider this guidance when optimizing their tax positions.

Accounting and Reporting

ASU 2023-09

In December 2023, the Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which seeks to enhance income tax disclosures in financial statements. As discussed in our previous publication on this topic,[5] the ASU provides greater transparency into entities’ global operations and provides users with crucial information that helps investors.

Most significantly, the update introduces new quantitative and qualitative disclosure requirements. Reconciliations of effective tax rates will be required to report both percentages and reporting currency amounts for eight specific categories. Furthermore, some reconciling items would be required to be broken out to the extent the impact is greater than or equal to 5 percent of the amount, computed by multiplying income (or loss) by the applicable statutory federal income tax rate. For entities parented in the U.S., this amount is effectively any item with an effect of 1.05 percent (21 percent U.S. federal corporate tax rate x 5 percent) or greater.

Public companies will be required to adopt the new standard for reporting periods beginning after December 15, 2024 (e.g., calendar year end 2025).

A&M TAS Says: 
With public company adoption rapidly approaching, companies should start evaluating their reporting processes to ensure that there are proper systems in place to gather the required information in preparation for the first reporting year in which it is applicable. Additionally, companies must decide whether to provide for the optional retroactive application of the rules. 

State

Legislation Enacted in the First Quarter

Conformity to the Internal Revenue Code: Various states during the first quarter updated its conformity to the Internal Revenue Code (IRC). Arizona, under HB 2688 signed by its governor on February 28, 2025, updates the IRC conformity to January 1, 2025, and applies to income tax computations for tax years beginning from and after December 31, 2024. Similarly, West Virginia updated its IRC conformity date for corporate net income tax purposes to federal changes made after December 31, 2023, but before January 1, 2025. Under H.B. 3, Idaho also updated its IRC conformity date to the IRC as amended and in effect as of January 1, 2025.

A&M TAS Says: 
Companies should carefully assess how recently enacted state tax law changes, even if not yet effective, could impact their deferred tax assets and liabilities. Under ASC 740, these changes must be accounted for in the period of enactment, requiring a remeasurement of deferred balances to reflect the new tax provisions.

Legislation Effective in the First Quarter

Idaho: House Bill 40 signed by governor on March 6, 2025, reduces the flat corporate and personal income tax rate from 5.695 percent to 5.3 percent. The bill is effective immediately and applicable retroactively to January 1, 2025.

Michigan: Starting from tax years beginning on or after January 1, 2025, a taxpayer or employer that qualifies as an authorized business can claim the R&D credit for research expenses incurred in Michigan during the calendar year. An "authorized business" includes corporations, insurance companies, financial institutions and unitary business groups. For businesses with 250 or more employees, a credit is available equal to 3 percent of qualified research expenses (QRE) up to the base amount, and 10 percent of QREs exceeding the base amount (limited to $2,000,000 of credit). For businesses with fewer than 250 employees, a credit is available equal to 3 percent of QREs up to the base amount and 15 percent of QREs exceeding the base amount (limited to $250,000 of credit).

A&M TAS Says: 
When state tax legislation becomes effective within a year, companies must reflect the impact on their tax provision in the period in which it becomes effective. This requires adjusting the tax provision to account for the new rates or rules for taxable income generated post-effective date. Companies should ensure that their systems and processes capture these changes promptly and that financial statement disclosures clearly explain the impact on current period tax expense and overall tax positions.

Other Developments

New Jersey: The New Jersey Division of Taxation has released a package of proposed guidance related to the corporate business tax (CBT) that would amend, repeal and implement new regulations in response to recent statutory changes. The deadline for taxpayers to submit written comments is April 19, 2025. In pertinent part, the guidance package addresses:

1. Net Operating Losses: Proposed new rules would establish a pooling system for combined group members and would require tracing of the NOLs to be maintained by the combined group and members. These changes would apply to privilege periods ending on and after July 31, 2023.
2. Combined Reporting: Proposed amendments would clarify the treatment of, and add definitions for, various entities, such as captive investment companies, captive real estate investment trusts, and captive regulated investment companies. It will also modify and clarify the definition of “unitary business,” “worldwide basis” and “worldwide group.”
3. Internet Activities: Proposed new regulation would provide clarity on whether internet activities exceed P.L. 86-272 protections.
4. Others including the treatment of IRC Section 959, bright-line nexus rules, sourcing capital gains, etc.

Indiana: Under new regulation Section 45 IAC 3.1-1-55.5, the Indiana Department of Revenue (Department) has implemented a new rule based on 2019 legislation, effective retroactively from January 1, 2019, which introduces market-based sourcing for the apportionment of most receipts from services and intangibles as established under Senate Bill 563 (2019). The Department asserts that this rule provides businesses with certainty regarding Indiana’s treatment of most services and intangible transactions and simplifies the determination of whether receipts are sourced to Indiana or elsewhere. Additionally, the Department has repealed its previous "costs of performance" sourcing rule, 45 AIC 3.1-1-55.

Georgia: The Georgia Department of Revenue (DOR) adopted amendments to corporate income tax regulation Section 560-7-3-.13. The regulation, effective January 1, 2023, provides that members of a Georgia affiliated corporate group that file federal consolidated corporate income tax returns may elect to file a Georgia consolidated return. Previously, a group of affiliated corporations had to petition the Commissioner for permission to do. The regulation also provides that any Georgia affiliated group, which was granted permission to file a consolidated return for taxable years beginning before January 1, 2023, can either elect to file a Georgia consolidated return pursuant to this regulation, continue to file a consolidated return pursuant to the terms of the prior grant of permission, or cease filing a consolidated return and file separately. The election, once made, is irrevocable for five years.

A&M TAS Says: 
For anticipated tax law changes that are neither enacted nor effective, companies should monitor developments closely but refrain from reflecting any impact in their current ASC 740 calculations. Proactive scenario planning and open communication with stakeholders can help ensure readiness for potential adjustments while maintaining compliance with reporting standards. 

Further Thin Capitalisation Draft Guidance

On December 4, 2024, the ATO released further draft guidance on the new thin capitalisation rules:

• Draft TR 2024/D3 which sets out the ATO’s proposed — and restrictive — interpretation of key elements of the new third party debt test (TPDT). The draft ruling does not cover conduit financing rules, but it provides numerous examples to clarify the ATO's stance.
• Updated PCG 2024/D3 to include new schedules focusing on TPDT compliance and restructures to access the TPDT. In acknowledging that restructures to access the TPDT may be required, the ATO provides (limited) windows during which taxpayers can benefit from a more lenient compliance approach.

A&M has provided detailed analysis on the draft guidance.[1] A&M has made a submission to the ATO as part of the public consultation process.

Equity Funded Distributions Draft Guidance

Also on December 4, 2024, the ATO released PCG 2024/D4, outlining its proposed compliance approach for the equity funded distributions measure. While PCG 2024/D4 has clearly benefited from the extensive consultation already undertaken on this measure:

• There is a very large gulf between the ATO’s “low risk” and “high-risk” examples, meaning many taxpayers will fall in the “gap” and be unable to effectively self-assess under the Draft PCG; and
• Additional guidance will be required to properly understand the ATO’s compliance approach to special dividends paid in the context of public M&A.

A&M TAS Says: 
In summary, the draft guidance indicates a stricter approach to compliance, necessitating that companies meticulously document their tax positions and scrutinize their financing arrangements. Companies should begin evaluating their financing arrangements in light of this updated guidance to determine the appropriateness or risks associated with the debt deductions claimed.

As of Q1 2025, additional jurisdictions are in effect for Pillar 2, with more continuing to enact legislation. These complex rules can result in mismatch of tax liabilities due to jurisdictional blending and ownership structures, leading to unwarranted top-up taxes for certain legal entities. A tax sharing agreement (TSA) can help address this problem statement.

TSAs are intercompany arrangements between affiliated entities within an MNE group. These arrangements ensure that entities within the group bear an appropriate share of the overall tax burden or tax benefits, based on their economic activities and contributions to the group's income. TSAs have been a common practice for MNEs operating within fiscal unity tax return filing regimes (e.g., U.S., Netherlands) as a mechanism to allocate and settle taxes within the consolidated filing group.

Within the context of Pillar Two, the following questions arise:

• Which entity or entities are obligated to pay the top-up tax?
• When more than one entity contributes to the top-up tax, how should that be allocated within the group?
• How should the top-up tax be presented in the standalone financial statements of a low-taxed entity that caused, but is not liable for, the tax?

The answers to these questions depend on the enacted local tax laws and the organizational structure of the MNE. Enacted law determines which Pillar 2 charging provisions are effective, i.e., Income Inclusion Rule (IIR), Qualified Domestic Minimum Top-up Tax (QDMTT), or Undertaxed Profits Rule (UTPR). A perimeter analysis of the MNE's structure determines the charging provisions and entities (or entity) that are liable for any top-up tax at the jurisdictional level.

The next steps are to consider an allocation and settlement process of any top-up tax to the constituent entities within a jurisdiction; model rules provide discretion in this area. A TSA is a pragmatic solution that will facilitate an impartial distribution of economic benefits, ease tax obligations, and enhance transparency among related parties on any top-up tax.

Implementing a TSA requires consideration of technical accounting and tax matters, such as:

1. Local jurisdictional tax law: What are the local tax consequences on a legal entity of TSA charges? Does it result in income, deduction, dividend income or capital contribution?
2. Top-up tax: A TSA does not preclude top-up tax obligation, but does it result in any GloBE adjustment?
3. Financial accounting: Is a TSA charge accounted for in pretax income or as a component of income tax expense? The answer to this depends on the rules defining the entity legally liable to the top-up tax and provisions outlined in the TSA. The accounting treatment form the bases on which GloBE Income and Covered Taxes are computed and may impact domestic income tax return calculations.
4. Transfer pricing: TSA, being an intercompany agreement, is subject to jurisdictional transfer pricing requirements.

A&M TAS Says:
Beyond the technical analysis noted above, the design and implementation of a TSA requires consideration of the business objectives of the related parties and governance structure to modify the TSA as business changes necessitate. Careful analysis and design will ensure internal objectives are achieved, risks are managed and top-up-taxes are equitably managed. 

2025/26 Budget

The Hong Kong 2025/26 budget was announced on February 26, 2025. Key tax measures to note:

1. BEPs Pillar 2: The government continues to advance the implementation of a 15 percent global minimum tax and a Hong Kong minimum top-up tax on large multinational entity (MNE) groups with an annual consolidated group revenue of at least EUR 750 million under the OECD proposal to address base erosion and profit shifting, starting in 2025. In the recent draft bill, the Income Inclusion Rule and domestic minimum top-up tax will be effective from January 1, 2025, while the Undertaxed Profits Rule will be postponed.
2. Tax deduction for expenditure related to Intellectual Property (IP): To accelerate the development of IP-intensive industries and promote IP trading in Hong Kong, the government will review the tax deduction policies for IP-related expenditures, including lump-sum licensing fees and costs associated with acquiring or utilizing IP from affiliates.
3. Double tax treaty network: The government continues to focus on expanding Hong Kong’s network of comprehensive avoidance of double taxation agreements with 17 countries.

A&M TAS Says:

As a result of the expected retroactive enactment of Pillar 2, MNEs must optimize their tax accounting processes now to address Pillar 2 reporting requirements, which are integrated into future state compliance. The reporting foundation will also enable modeling scenarios to assess investment strategies (including IP) while maintaining an optimal effective tax rate for Pillar 2 and positioning Hong Kong as a competitive hub for international business. 

BEPS Pillar 2 – Recent Developments

Effective from January 1, 2025, Singapore will enforce a minimum effective tax rate of 15 percent on qualifying profits, in accordance with the BEPS Pillar 2 initiative. UPEs of MNE groups must notify the Singapore tax authorities of their liability to register under the new Multinational Enterprise (Minimum Tax) Act 202 act and file tax returns on their top-up tax liability. Additionally, all registered MNE groups must file a GloBE Information Return (GIR) with Singapore unless it is filed with another jurisdiction. Even if filed elsewhere, an annual GloBE notification must be submitted to Singapore tax authorities to inform them of the foreign UPE's identity and the jurisdiction where the GIR is filed.

2025 Budget

Budget 2025 was announced on February 18, 2025. Key tax measures to note:

1. Corporate Income Tax (CIT) Rebate:
   • For the Year of Assessment (YA) 2025, companies will benefit from a CIT rebate of 50 percent on their Singapore tax liability. Companies that employed at least one local employee in 2024 will qualify for a cash payout of S$2,000. The maximum total benefit a company can receive from both the CIT rebate and the cash payout is capped at S$40,000.
2. Extension of Merger and Acquisitions (M&A) and Double Tax Deduction for Internationalisation (DTDi) Schemes:
   • The M&A scheme, which provides tax benefits to Singapore companies making qualifying acquisitions, will be extended from its original expiration date of December 31, 2025, to December 31, 2030. This extension maintains the current benefits, including an M&A allowance based on 25 percent of up to S$40 million of qualifying acquisitions per YA, and a 200 percent tax deduction on transaction costs, capped at S$100,000 per YA (subject to meeting relevant conditions).
   • The DTDi scheme, which allows businesses a 200 percent tax deduction on qualifying market expansion and investment development expenses, will also be extended until December 31, 2030. Detailed information about the extended scheme will be available in Q2 2025.
3. Tax Deductions for Payments Made Under Approved Cost-Sharing Arrangements (CSAs):
   • To encourage innovation activities, with effect from February 19, 2025, companies will be able to enjoy a 100 percent tax deduction on payments made under approved CSAs for innovation activities, even if these activities do not meet the definition of "research and development" under the Singapore Income Tax Act. Further details on this initiative will be available by Q2 2025.
4. Introduction of the Private Credit Growth Fund:
   • Ongoing proposal of introducing a S$1 billion Private Credit Growth Fund which seeks to provide alternative financing options for high-growth local enterprises.
5. Tax Concessions for Asset and Wealth Management:
   • Listing CIT Rebate for New Corporate Listings in Singapore: Qualifying entities may apply for a 10 percent or 20 percent listing CIT Rebate (primary or secondary listings, respectively) for new corporate listings in Singapore. The listing CIT Rebate is granted for a nonrenewable period of five years and is open for award until December 31, 2027.
   • Concessionary Rates for New Fund Manager Listings in Singapore: The Financial Sector Incentive Fund Management (FSI-FM) Scheme currently accords concessionary tax rates of 10 percent on income derived from the management or advisory of a qualifying fund (qualifying income) derived by a qualifying Singapore fund manager. An enhanced corporate tax rate tier of 5 percent on qualifying income will be introduced under the FSI-FM Scheme for qualifying newly listed fund managers that satisfy conditional requirements.
   • Tax Exemption on Fund Managers’ Qualifying Income Arising from Funds Investing Substantially in Singapore-Listed Equities: The FSI-FM Scheme will be further enhanced to introduce a corporate tax exemption for management/advisory fees derived by a qualifying fund manager from the management/advisory of a qualifying fund that meets additional criteria.

A&M TAS Says: 
While the incentives and concessionary rates present opportunities for companies to optimize their tax profile and consider Singapore as a strategic location for investment, companies should consider the legal and regulatory implications on these matters. In relation to Pillar 2, it is critical to have the systems and processes operationalized to calculate interim 2025 Pillar 2 calculations which are aligned with reporting standards of UPE (U.S. GAAP or IFRS) and local statutory reporting.

Multinational Top-up Tax: Undertaxed Profits Rule – OECD Pillar Two

The UK Finance Act 2025 (the Act, the Finance Act) received Royal Assent on 20 March 2025 for and therefore was substantively enacted for U.S. GAAP at that date. Note that for UK accounting purposes under UK GAAP or IFRS it was substantively enacted on March 3, 2025, when the bill had its third reading in the House of Commons. Included in this Finance Act are provisions which legislate for the Undertaxed Profits Rule (UTPR), one of the charging mechanisms within Pillar Two. The UTPR will be effective for accounting periods beginning on or after December 31, 2024.

The Act also includes some technical amendments to the Multinational and Domestic Top-up Tax legislation to incorporate latest international updates and following stakeholder consultation.

The UTPR will impact groups within the scope of Pillar Two and may be a particular concern for U.S. parented groups, or groups with parents or sister companies which have not implemented Pillar Two or a qualifying domestic minimum top-up tax. Currently, the Income Inclusion Rule (IIR) of Pillar Two only seeks to allocate top-up tax based on a parent’s ownership interest. The UTPR will operate as a backstop to the IIR and bring entities within charge to top-up tax regardless of ownership interest; that is, it will apply to any entity in a multinational enterprise within Pillar Two, that is situated in a low-tax jurisdiction, therefore potentially widening the exposure to Pillar Two taxes.

Companies within scope are already subject to disclosure requirements in respect of exposure to top-up taxes, and the introduction of the UTPR will require further consideration of the qualitative and quantitative information needed in financial statements, including the impact to current tax expense where UTPR is charged.

A&M TAS Says: 
With the UK Finance Act receiving Royal Assent, the law is “enacted” under the application of ASC 740. Accordingly, companies should assess the impact of the tax law and regulation changes and consider whether there is an impact to their deferred tax assets and liabilities. 

Changes to R&D Tax Relief and Other Creative Sector Reliefs

The merged R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) replaced the old R&D tax relief scheme for accounting periods beginning on or after April 1, 2024. This will have already impacted companies preparing financial statements shorter than 12 months where the accounting period commenced on or after April 1, 2024, but we will see more cases of the new regime from the end of March 2025 when companies with a March 31, 2025 year end will start to prepare financial statements.

For small and medium sized enterprises (SME), the previous R&D tax relief scheme allowed an additional tax deduction that either reduced taxable profits or increased tax losses. Excess losses could be surrendered for a 10 percent nontaxable credit (or 14.5 percent for R&D intensive companies), which would have been recognised as a credit against the tax line, with a corresponding increase in tax debtor.

The new merged RDEC instead provides a 20 percent taxable credit on qualifying expenditure. This credit is recognised “above the line” as other income and will increase EBITDA.

The ERIS scheme will operate in the same way as the old R&D tax relief scheme but will be available only to SMEs whose activities are R&D intensive.

The transition from the old R&D tax relief scheme to the new merged RDEC will result in additional EBITDA for qualifying companies, impacting EBITDA based company valuations, KPIs or financial covenants.

SMEs that claimed under the old R&D tax relief scheme should assess the impact of the change in accounting recognition of the benefits conferred by the new merged RDEC and consider including R&D credits in forecasting future EBITDA.

A&M TAS Says:
Filers that have not yet measured and recognized the impact of the new merged RDEC regime in the UK will begin doing so this quarter in interim financial statements as the law becomes applicable. Companies will need to assess the impact of the new merged RDEC on their financial statements and valuations.