Republican members of the House of Representatives have proposed replacing the US Federal corporate income tax with a "destination-based cash-flow tax" (DBCFT) (sometimes referred to as a "border adjustment tax").
The DBCFT taxes cash flow, rather than profits. It is "border adjusted": imports are taxed but exports are exempt from tax. Exchange rates may move dramatically to compensate, with some envisaging the US dollar appreciating by up to 25%. To the extent it does not, the DBCFT will behave like a tariff.
This briefing looks at the effects of the DBCFT, which would be felt well beyond the borders of the US, and would impact any business exposed to trade with the US or to the US dollar.