Bloomberg Tax Introduces New Portfolio Addressing Global Intangible Low-Taxed Income

Arlington, Va. (May 17, 2022) — Bloomberg Tax & Accounting today announced the release of a new Tax Management Portfolio, Global Intangible Low-Taxed Income (GILTI). Authored by Libin Zhang of Frank, Harris, Shriver & Jacobson LLP, the Portfolio describes who is subject to GILTI and provides guidance and a detailed discussion on the GILTI computation.

The Tax Cuts and Jobs Act of 2017 redesigned the U.S. international income taxation system to a territorial regime, under which foreign earnings of a U.S. corporation’s foreign subsidiaries are not subject to U.S. income tax when earned or distributed to the U.S. parent corporation, but instead taxed under local jurisdictions. To discourage U.S. corporations from shifting their intangible income offshore to low-tax foreign jurisdictions in response to this change, the GILTI provisions were introduced. GILTI provisions impose a minimum rate of U.S. income tax on select types of foreign income earned by controlled foreign corporations.

This Portfolio addresses the simultaneous equations involved with GILTI computation, allocation, and apportionment rules, as well as the §250 deduction, with numerous examples. The Portfolio also discusses in detail how the special foreign tax credit rules apply to GILTI inclusions.

“Most companies and many individuals are affected by GILTI due to their foreign operations, and it is important for tax practitioners to have a well-rounded knowledge of all the tax rules so they can spot issues and structure for their clients properly,” said Zhang, who also authored the Portfolio on Passive Loss Rules.

“Given the complexity of the U.S. International tax system and the important role of GILTI within it, all individuals and companies that have foreign operations will find this Portfolio valuable,” said Heather Rothman, vice president of analysis & content, Bloomberg Tax & Accounting. “Libin Zhang’s expertise will assist tax professionals in understanding and mitigating the tax exposure and forecasting scenarios to understand the impact of the current and upcoming possible changes in this area.”

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