Estimated reading time: 2 minutes

The article in brief:

• Tariff and tax policy changes are reshaping tax planning and creating new valuation needs.
• Common triggers include restructurings, cross-border transactions, financing changes, supply chain sourcing, and operating model shifts.
• Early valuation support may help strengthen tax positions, reduce execution risk, and support planning timelines.

As companies respond to shifting international tax provisions, U.S. tariff policy, and the One Big Beautiful Bill Act (OBBBA), tax planning is becoming more complex and more closely tied to valuation. Changes to legal entity structures, intercompany arrangements, financing strategies, and supply chain sourcing may create valuation requirements that are easy to overlook until deadlines are near. Companies may need to reassess valuations of entities, functions, and intercompany arrangements to support the intended tax positions.

Common Triggers for Valuation Analysis

• International tax provisions. New international tax rules, such as Pillar 2, the Net CFC Tested Income (NCTI), the Foreign-Derived Deduction Eligible Income (FDDEI), and the base erosion and anti-abuse tax (BEAT), have realigned the taxation of multinational profits, often triggering reorganizations that may require tax valuation analyses. Companies that have restructured legal entities, revised cross-border fee or royalty arrangements, supply chain sourcing or redesigned intercompany financing may require valuation support for intangible and tangible asset transfers, as well as intercompany pricing.

• Tariffs. Tariffs may accelerate supply chain restructuring and changes to operating models, which may have direct valuation implications. These developments may trigger valuations of transferred functions, exit payment analyses, and the alignment of customs valuation with transfer pricing.
• Bonus depreciation (Section 174). Clients using large catch-up deductions may accelerate income recognition to manage tax attributes through internal intangible asset sales or taxable legal entity reorganizations. In these cases, valuation analysis may be needed to support the valuation of transferred assets or entities, or the overall transaction structure.
• Business interest expense (Section 163(j)). With adjusted taxable income (ATI) once again calculated on an EBITDA basis, some companies may consider refinancing strategies or redesigning intercompany lending arrangements. This can create a need for debt capacity studies, interest rate and guarantee fee analyses, and fair market value support for intercompany notes and guarantees.
• Qualified Business Income (QBI) (Section 199A). Because the QBI deduction is now permanent, private companies may revisit entity choice and ownership structure. These decisions may create valuation needs related to distributions, redemptions, and allocations tied to conversions, reorganizations, or carve-outs.
• Qualified Small Business Stock (QSBS) (Section 1202). The OBBBA expanded the scope and benefits of Section 1202, increasing the importance of meeting the aggregate gross asset test. Companies may need a contemporaneous valuation to support qualification and help strengthen documentation for the related tax benefit.

Planning Implications

Tax planning increasingly requires more than technical tax analysis alone. As legislative changes and tariff pressures reshape business structures and transaction activity, companies may want to assess whether valuation support is needed to document decisions, support compliance, and reduce execution risk.

Early valuation involvement may help companies identify issues sooner, avoid execution delays, and strengthen support for key tax positions before year-end deadlines. Timely valuation insights may improve coordination across tax, finance, and transaction teams, especially when tax strategies involve multiple moving parts such as legal entity changes, financing updates, or cross-border adjustments.

VRC’s Tax, Compliance & Planning team works with clients to help ensure that tax-driven strategies are supported by robust, defensible valuation analyses. We welcome you to contact the authors or a VRC professional nearest you.