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Senate Finance Committee Chair Releases Draft of International Tax Reform Legislation

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

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:

  1. 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.
  2. Update subpart F to align the mechanics of subpart F more closely with the mechanics of GILTI.
  3. Extend the high-tax exclusion rule to foreign branches so the rules for foreign income apply consistently across types of foreign income.
  4. Amend the foreign tax credit limitation rules for certain expenses if activity is conducted in the United States.
  5. 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.”
  6. 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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