In this article, Sharon Burke takes a look at tax features of the Global Intangible Low Taxed Income (GILTI) regime introduced by the United States of America (US) as part of the tax reform package of measures.
Post tax reform the US regime taxes currently in the US the worldwide income of US MNCs with a limited scope exception where foreign profits are tax exempt when repatriated to the US.
This is a significant change from the previous regime under which US federal corporate income tax (CIT) at a rate of 35% could be deferred on much of the profits of overseas subsidiaries until the profits were paid back to the US. The switch to current taxation or exempt tax treatment of foreign profits potentially ends the lock out effect under which many US companies deferred repatriating overseas earnings to the US.
The switch to a broader scope of current US taxation of foreign earnings requires a fundamental shift in thinking on the part of a US parent when evaluating the US tax consequences of foreign investment including in an Irish subsidiary.
Click below to read Sharon’s analysis of the main shifts in the US tax analysis of investment in Ireland in the KPMG TaxWatch article ‘Presumed GILTI – what it means for US investment in Ireland’.