Taxpayers with offshore holdings received a gift that just keeps giving back on December 22, 2017. Just before Christmas the Tax Cuts and Jobs Act was signed into law, which included the tax on Global Intangible Low-Taxed Income (GILTI).
Less than four years later, Congress is looking to significantly amend the GILTI law, adding in new terms and new ways of computing the taxable income. On August 26th, the draft legislation was made public. We can see a new country-by-country system for GILTI calculation, dividing countries into "high-tax tested income states" and "low-tax tested income states," an expansion of the entity subject to GILTI from controlled foreign corporation (CFC) to the "tested unit," and a planned reduction of the GILTI deduction that they will determine later.
It's not all bad news. New research-and-development expense rules would mitigate the tax on GILTI income when companies invest in the United States. This creates critical planning opportunities for U.S. companies with offshore business, or offshore businesses that have U.S. branches.
IRS Medic has been on top of GILTI since its inception, and we have helped many clients file it correctly. If you need your CFC and GILTI filings done correctly, give us a call. We are up to the task.