The delegation of the European Union to the United States has submitted comments concerning the proposed regulations (REG-104464-18) released in March 2019 relating to the deduction for “foreign-derived intangible income” (FDII) and “global intangible low-taxed income” (GILTI) under section 250.
According to the EU letter [PDF 187 KB] (dated May 6, 2019), the provisions under section 250 and the FDII proposed regulations:
…are (1) most likely breaching US obligations under the World Trade Organization (WTO) and other international obligations, and (2) not fit to reduce tax avoidance and aggressive tax planning.
Given the design and effect, the FDII tax deduction is most likely a prohibited export subsidy under the WTO Agreement on Subsidies and Countervailing Measures. This measure is therefore in conflict with US treaty obligations.
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