Are you a corporate or individual shareholder of a controlled foreign corporation (CFC)? If so, it is imperative that you discuss changes to your tax plan with an experienced foreign tax attorney as soon as possible. Schedule a consultation with the leading GILTI planning attorneys at SF Tax Counsel right away.
What is GILTI?
The 2017 Tax Cuts and Jobs Act included a new Global Intangible Low-Taxed Income (“GILTI”) provision that aims to tax the intangible property of CFCs. However, due to the specific wording of the legislation, most CFCs will likely experience a substantial increase in tax liability on their global income.
GILTI exists to deter U.S. taxpayers from moving high-return intangibles offshore to avoid U.S. taxes. The law assigns a 10 percent return rate on a CFC’s fixed assets and any additional income over 10 percent is considered to be intangible GILTI. U.S. CFC shareholders will then include their pro rata GILTI share as an inclusion for the current year.
U.S. corporate shareholders of CFCs may claim a 50 percent deduction against any GILTI inclusion and the use of foreign tax credits paid by the CFC to reduce U.S. federal income taxes. Individual CFC shareholders may be able to utilize a Section 962 election to reduce tax liability on GILTI.
Start GILTI Planning Right Away
The new GILTI provision applies to tax years starting after December 31, 2017. Both corporate and individual CFC shareholders should begin planning to reduce GILTI inclusion taxes as soon as possible. Without proper planning, many CFC shareholders may fail to comply with the new provisions or may be surprised by a significant increase in taxes on foreign income.
Contact Our San Francisco GILTI Planning Attorneys for More Information
At the law firm of Diosdi & Liu, LLP, our experienced tax lawyers understand how the new tax reforms will affect CFC shareholders, and we can help enact a plan to minimize your tax liability whenever possible. To set up an appointment, call 833.829.4376 or contact us online.