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In brief

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.

Author

Joshua D. Odintz is a partner in and on the management committee of Baker McKenzie’s North American Tax Practice Group. Joshua held high-level government positions with both the US Department of the Treasury and the Senate Finance Committee. He previously served as a Senior Advisor for Tax Reform to the Assistant Secretary at the US Department of the Treasury, where he advised Senior Treasury officials on tax reform options and issues. Joshua also served as the Chief Tax Counsel to the President’s National Commission on Fiscal Responsibility and Reform, and was instrumental in formulating the tax proposals that were contained in the Commission’s report, entitled the Moment of Truth. Additionally, Joshua served as the Acting Tax Legislative Counsel at the Treasury. Joshua is a frequent speaker at IFA, TEI, ABA Tax Section, NY State Bar Tax Section, Practicing Law Institute and Federal Bar Association tax meetings and conferences.

Author

Alexandra Minkovich is a partner in Baker McKenzie's North American Tax Practice. She has over a decade of experience handling a variety of tax, tax controversy and legislative issues. She also brings significant experience representing clients with respect to domestic tax issues, including advising financial institutions, and is well versed in administrative law. Immediately prior to joining the Firm, Ms. Minkovich served as Associate Tax Legislative Counsel with the U.S. Department of Treasury, Office of Tax Policy. In that role, Ms. Minkovich advised the Assistant Secretary (Tax Policy) and General Counsel regarding tax policy considerations in regulations and Internal Revenue Bulletin guidance, provided advice on tax legislative proposals, and provided litigation advice regarding the validity of Treasury and IRS guidance. She also provided technical comments on tax legislation to the Senate Committee on Finance and the House Ways & Means Committee, as well as to individual members’ offices.

Author

Christopher H. Hanna joined Baker McKenzie as Counsel in January 2019. He is the Alan D. Feld Endowed Professor of Law and the Altshuler Distinguished Teaching Professor at Southern Methodist University. Professor Hanna has been a visiting professor at the University of Texas School of Law, the University of Florida College of Law, the University of Tokyo School of Law and a visiting scholar at the Harvard Law School and the Japanese Ministry of Finance. In 1998, Professor Hanna served as a consultant in residence to the Organisation for Economic Co-operation and Development (OECD) in Paris. From June 2000 until April 2001, he assisted the US Joint Committee on Taxation in its complexity study of the US tax system and, from May 2002 until February 2003, he assisted the Joint Committee in its study of Enron, and upon completion of the study, continued to serve as a consultant to the Joint Committee on tax legislation. From May 2011 until December 31, 2018, he served as Senior Policy Advisor for Tax Reform (Republican staff) to the United States Senate Committee on Finance, working extensively on the Tax Cuts and Jobs Act of 2017.