As part of the Tax Cuts and Jobs Act (TCJA), Congress substantially reformed the international tax system adding a new 10.5% effective minimum tax on global intangible low-taxed income (GILTI).
GILTI is applied on an aggregate basis – total active income of all of a US multinational’s foreign subsidiaries. During enactment of GILTI as part of TCJA, the drafters referred to GILTI as the “one CFC rule.” In other words, treat the income of all the foreign subsidiaries of a US multinational as coming from one controlled foreign corporation (CFC). President-elect Joe Biden has proposed applying GILTI on a country-by-country basis along with increasing the effective tax rate on GILTI to 21%.
Read the full alert in the North America Tax and News Development.