New CFC rules in the USA

Local tax news

USA - New CFC rules
The USA implemented major changes to the taxation of CFCs which are effective from 1 January 2018 and include:
 
     (i) broadening the scope of conditions under which a foreign corporation may be treated as a CFC;
 
     (ii) changing the participation exemption regime;
 
     (iii) introducing a repatriation tax on offshore deferred earnings of CFCs; and
 
     (iv) implementing a new category of CFC income, referred to as “global intangible low-taxed income" (GILTI).
 
GILTI is defined as the income of the CFC that exceeds a deemed 10% rate of return on the CFC’s tangible property. The tangible property is deemed to generate the CFC’s active foreign income, with a 10% return. 10% is presumed to be a normal return on the corporation’s tangible foreign assets. The reminder of the CFC income is deemed to be generated by intangible property. The US shareholder is taxed on 50% of GILTI and may credit 80% of taxes paid in other country against US corporate tax.

Other news

New GILTI module on its way
​In the light of the US tax reform and the implication it will have for many of our customers we are happy to announce that we are currently developing a new GILTI module with the input from our US partner Saville CPAs & Advisors. Our new module will reflect the new rules and allow you to run calculations with the complete transparency that you are used to have.​
 
Since, however, that the module will be launched in a few weeks and that you already need to start preparing for how GILTI will affect your organization we have added a new section in the Commentary database. You may find this section through Database / choose United States from the list of countries / Anti-avoidance / CFC legislation.
 
If you require some further information at this time on how GILTI will impact your organization please contact [email protected].