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Tax Update

First Set of Proposed Regulations Released On GILTI

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On September 13, the U.S. Internal Revenue Service (IRS) and Department of the Treasury (Treasury) released proposed regulations (Proposed Regulations) providing guidance on the global intangible low-taxed income (GILTI) provisions in Section 951A of the Internal Revenue Code of 1986, as amended (Code),1 enacted as part of the 2017 tax reform legislation known as the Tax Cuts and Jobs Act (Tax Act). The Proposed Regulations are largely dedicated to computational and definitional guidance with respect to calculating GILTI. They also include significant revisions to rules for calculating “subpart F income” inclusions, which now also apply for GILTI purposes. Notably, the Proposed Regulations do not provide guidance on the deduction used to reduce the effective tax rate on GILTI to 10.5 percent (through 2025) or 13.125 percent (after 2025) or foreign tax credits (FTCs) with respect to GILTI.2 Guidance on these topics is forthcoming. 

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