Increase in Deemed Paid Foreign Tax Credit Percentage |
80 % of foreign taxes deemed paid could be claimed. |
Increased to 90 % for CFC tested income |
Reduces residual U. S. tax on foreign earnings for U. S. multinationals |
Modification of FDII and GILTI Deductions |
FDII deduction 37.5 %, GILTI deduction 50 % |
FDII deduction reduced to 33.34 %, GILTI deduction reduced to 40 % |
Increases effective U. S. tax rate on foreign intangible income; may affect cross-border planning |
Redefinition of GILTI as Net CFC Tested Income |
GILTI included a deemed return on foreign investments |
GILTI renamed " net CFC tested income "; deemed return repealed |
Simplifies calculation, but may increase U. S. tax on foreign earnings |
Repeal of 1 Month Deferral for Specified Foreign Corporations |
Specified foreign corporations could elect a taxable year ending one month later than the U. S. parent. |
The 1-month deferral election is repealed. |
Aligns taxable years of foreign subsidiaries with U. S. parents, simplifying compliance and reducing deferral opportunities. |