September 14, 2018

The IRS Issues Proposed GILTI Regulations

By Mark Chaves, International Tax Co-Leader & Douglas Nakajima, International Tax Co-Leader

Related Services Tax & Business, International Tax

The IRS Issues Proposed GILTI Regulations Tax & Business

On September 13, 2018, the IRS issued proposed regulations concerning the Global Intangible Low-Taxed Income (“GILTI”) provisions enacted under section 951A as part of the Tax Cuts and Jobs Act.

The GILTI rules require the inclusion of the GILTI generated by controlled foreign corporations (“CFCs”). U.S. persons that own at least 10 percent of the value or voting rights in one or more CFCs will be required to include a GILTI inclusion amount as currently taxable income, regardless of whether any amount is distributed to the shareholder. A “U.S. person” includes U.S. individuals, domestic corporations, partnerships, trusts and estates.

New reporting rules requiring the filing of Form 8992, “U.S. Shareholder Calculation of Global Intangible Low-Taxed Income”, are also described in the proposed regulations.

The new law applies to the first tax year of a CFC beginning after December 31, 2017, and the U.S. shareholder’s year with or within which that year ends, and all subsequent tax years.

These proposed regulations do not include foreign tax credit computational rules relating to global intangible low-taxed income, which will be addressed separately in the future.

Pursuant to IRS procedures, the proposed regulations will be subject to a period of public commentary and hearings. Additionally, the IRS is seeking comments concerning compliance with the Section 965 requirements as well as with respect to treatment of specific items.

The proposed regulations can be reviewed at https://www.irs.gov/pub/irs-drop/reg-104390-18.pdf.

For additional information regarding the proposed GILTI regulations, and how it may affect you or your business, please contact your Marcum International Tax Services professional.