The U.S. Treasury Department and IRS this afternoon released final regulations (T.D. 9866) relating to section 951A and the “global intangible low-taxed income” (GILTI) provisions as added to the Code by the 2017 U.S. tax law (often referred to as the “Tax Cuts and Jobs Act”).
Read the final regulations [PDF 1.01 MB] (318 pages)
The 2017 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 a controlled foreign corporation’s (CFC) tangible assets (10% of depreciated tax basis).
The final regulations provide guidance:
The final regulations are scheduled to be published in the Federal Register on June 21, 2019. The purpose of this report is to provide text of the regulations.