The Internal Revenue Service (IRS) recently proposed regulations concerning the treatment of global intangible low-taxed income (GILTI). The regulations are a result of the Tax Cuts and Jobs Act (TCJA), which added new rules requiring the inclusion of GILTI generated by controlled foreign corporations (CFCs). (See our blog post on foreign provisions in the TCJA for more information.)
Under the TCJA, a U.S. person (defined here as a U.S. individual, domestic corporation, partnership, trust, or estate) owning at least 10 percent of the value or voting rights in at least one CFC will be required to include its GILTI as currently taxable income, regardless of whether any amount is distributed to the shareholder.
The proposed regulations also address the new reporting rules requiring the filing of Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income. They do not, however, address the foreign tax credit computational rules relating to GILTI, which will be addressed separately at a later date.
We will keep you informed of any additional updates. If you have any questions about GILTI or the impact of the Tax Cuts and Jobs Act, please reach out to us.