Just after 4 p.m. on Thursday, September 13, 2018, the IRS released its second set of proposed international regulations under the Tax Cuts and Jobs Act of 2017 (TCJA).
These proposed regulations provide the first piece of Treasury guidance under Code Section 951A (Global Intangible Low Taxed Income), which brings into effect the so-called “GILTI” regime. To put it simply, GILTI is a mechanism to tax U.S. shareholders of controlled foreign corporations (CFCs), on their share of CFC income over and above a 10 percent return on the tax basis of tangible depreciable assets (subject to certain exceptions).
Some key areas where guidance is provided in the proposed regulations
The calculation of tested income and tested loss of a CFC: