3 GILTI Planning Options Non-C Corporations Should Consider Before Year-End
- Monday, November 12, 2018
Author: Ray Polantz
As a result of the Tax Cuts and Jobs Act (TCJA), U.S. shareholders of controlled foreign corporations (CFCs) could see a significant change in their tax bill beginning in 2018 — and not for the better. Absent strategic tax planning efforts, the new law will currently tax global intangible low-taxed income, or GILTI.
Below are some options and considerations taxpayers with CFCs should discuss with their advisors to mitigate the impact of the GILTI provisions.
How GILTI Works for a C Corporation
To fully understand planning options for non-C Corporations, it’s helpful to know how GILTI operates for C Corporations. C Corporations benefit from two specific GILTI provisions:
The net effect of the GILTI rules results in a U.S. corporate minimum tax of 10.5%. That rate is further reduced by foreign tax credits related to the GILTI amount.