The U.S. Treasury Department and IRS this afternoon released proposed regulations as guidance relating to the “global intangible low-taxed income” (GILTI) provisions under the new U.S. tax law.
Read the proposed regulations [PDF 516 KB] (157 pages)
The purpose of this report is to provide text of the proposed regulations. KPMG will provide a report of initial impressions about these proposed regulations in a future release.
A related IRS release (IR-2018-186) states that:
Treasury and IRS have requested comments on these proposed regulations.
The new U.S. tax law (Pub. L. No. 115-97, enacted December 22, 2017) generally retained the existing subpart F regime that applies to passive income and related-party sales, but created a new, broad class of income—“global intangible low-taxed income” (GILTI).
GILTI is deemed repatriated in the year earned and, thus, is also subject to immediate taxation. GILTI income is effectively taxed at a reduced rate while subpart F income is taxed at the full U.S. rate. In general, GILTI is the excess of all of the U.S. corporation’s net income over a deemed return on the CFC’s tangible assets (10% of depreciated tax basis).
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