A U.S. shareholder of one or more Controlled Foreign Corporation (CFC) shall include in gross income its “global intangible low-taxed income” (GILTI) in a manner similar to subpart F income. The effect of this rule is to subject a U.S. shareholder to a tax on the combined net income of its CFCs that (1) is not otherwise taxed un the U.S. on a current basis and (2) exceeds a fixed routine return on the CFC’S associated business assets.
Some terms you need to understand in order to calculate the GILTI.
- Tested income
- Tested loss
- Shareholder’s net deemed tangible income return
- Net CFC tested income
- Tested foreign income taxes
We are frequently approached with client requests to assist with GILTI Tax Compliance. Some common questions are:
- Does GILTI apply to me?
- I have several lines of business – how do I apply GILTI tax to only one portion of my business?
- Is GILTI shown on my form 5471? What other forms do I need to complete?
- What is the percentage tax on GILTI?
- I am thinking of creating a foreign subsidiary. What can I do to make sure that GILTI does not apply to me?
- I just realized that I have been filing my tax incorrectly last couple years. What can I do to correct the situation? How can I avoid penalties for non-compliance?