Editor’s Note: See Jim Tozzi on OMB Review of IRS Regulations.
From: KPMG
The new tax law in the United States generally retained the existing subpart F regime that applies to passive income and related-party sales, but a new, broad class of income—“global intangible low-taxed income” (GILTI)—was created. GILTI is also 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).
For purposes of implementing the GILTI rules, proposed regulations are pending review, and the IRS has released draft versions of forms related to the GILTI rules.