KPMG says inbound private equity structures remain preferred despite tax changes

Interest expense allocations to the GILTI category are gone under OBBBA, changing how private equity buyers model foreign tax credit capacity. For tax, M&A, and advisory groups, structure still drives execution, and in most cases the inbound model remains the cleaner starting point.

Inbound still has the edge, but the comparison is changing

Before the One Big Beautiful Bill Act, private equity buyers generally favored inbound multinational structures because they usually sidestepped the GILTI and subpart F regimes and eased foreign tax credit limitation pressure. Those rules change how buyers price a transaction, how they model cash taxes, and how much uncertainty they are willing to tolerate in the first draft of a deal model.

Tax reform did not erase the inbound advantage. The comparison is more complicated than it was a year ago, and the team doing the work needs to get into the weeds earlier. Absent further changes in law, inbound structures are still likely to remain preferred in most cases.

What changed in the deal math

The bill signed on July 4, 2025 as Public Law 119-21 brought major international tax revisions that now sit in the middle of structure selection. It changed GILTI, FDII, BEAT, foreign tax credit rules, and related cross-references, and KPMG updated its analysis on July 28, 2025 with new observations.

That shift is one reason tax teams cannot treat inbound structures as a legacy default or assume a U.S.-parented alternative is now automatically better. The impact runs through the actual mechanics of a transaction: whether the acquisition vehicle sits inbound or under a U.S. parent changes the projected tax burden, the repatriation path, the withholding profile, and the extent to which the buyer expects to use foreign tax credits to soften the result.

The Pillar Two backdrop is also part of the conversation

Treasury’s June 28, 2025 G7 statement described a proposed side-by-side system under which U.S.-parented groups would be exempt from the income inclusion rule and the undertaxed profits rule. Treasury said that understanding was informed in part by the Senate amendment of H.R. 1 and the removal of section 899 from the Senate version of the OBBBA.

For cross-border specialists, the question is whether a structure that looks tax-efficient under U.S. rules still behaves the same way once OECD/G20 Inclusive Framework rules, local country rules, and U.S. minimum tax developments are all layered together. The answer often depends on how quickly the buyer can reconcile those regimes in one recommendation.

Why this changes what tax teams need to ask earlier

The biggest operational effect is not just on the final structure choice. It is on the timing of the questions. Tax teams need to address structure before diligence gets too far down the road, because the choice affects financing, post-close integration, tax accounting, withholding, repatriation, and the conversations sponsors have with portfolio-company management teams.

For practitioners inside KPMG, that means the work cannot stay trapped inside one specialty. Cross-border specialists have to translate local law, OECD developments, and U.S. tax reform into a single recommendation that a client can actually use in a deal meeting. Transfer pricing, tax accounting, and M&A support are all implicated at the same time, which is why the inbound-versus-U.S.-parent question is a coordination exercise as much as a technical one.

The practical diligence questions now land earlier and more sharply:

• How does the structure affect FTC limitation capacity under the revised rules?
• Does the buyer expect GILTI, subpart F, or Pillar Two exposure to change after close?
• What assumptions go into the model if interest expense no longer allocates to the GILTI basket?
• Which local-country rules could override the cleaner U.S. picture?

What this means for KPMG deal, M&A, and tax professionals

If inbound structures stay preferred, the firm’s deal teams are likely to see more requests to validate why that remains true in a specific jurisdiction, for a specific buyer, with a specific financing stack. They still need to decide whether the structure wins once tax efficiency, diligence priorities, and modeling assumptions are all pulled into the same spreadsheet.

A client considering an inbound acquisition does not need a lecture on international tax architecture. It needs a defensible structure recommendation, an explanation of what has changed under OBBBA, and a map of what to diligence now instead of later. For professionals on partner track or on the bench in busy season, the difference shows up in how many rounds of revisions the model needs before the IC memo is ready.

Why KPMG is packaging this for practitioners now

The inbound private equity piece was originally published in Tax Notes Federal on June 8, 2026 and then included in KPMG’s June 15 to 19, 2026 Week in Tax roundup as a June 17 item.