Senate Finance Committee (SFC) Chair Ron Wyden, D-Ore, released draft international tax reform legislation along with a section-by-section description of the legislation.
According to the section-by-section description of the discussion draft, the legislation would make the following changes to the current international tax rules:
- Modify net Controlled Foreign Corporation (CFC) tested income, repeal the exemption for the 10% deemed return on qualified business asset investment (QBAI) owned abroad and modify the application of the country-by-country high-tax exclusion in GILTI.
- Update subpart F to align the mechanics of subpart F more closely with the mechanics of GILTI.
- Extend the high-tax exclusion rule to foreign branches so the rules for foreign income apply consistently across types of foreign income.
- Amend the foreign tax credit limitation rules for certain expenses if activity is conducted in the United States.
- Modify deductions for foreign-derived innovation income and net CFC tested income, increase the GILTI and FDII rates, and modify the definition of “deemed intangible income.”
- Modify the tax on base erosion payments.
The SFC Chair is asking for comments on this discussion draft. Comments should be sent to InternationalTax@finance.senate.gov by September 3, 2021.
To continue your research on Global Intangible Low-Taxed Income (GILTI), see FTC/FIN ¶O-2790 et seq.
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