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Gain an international perspective on tax reform with vital knowledge from Ryan Dudley, CPA, CA, CTA, MIT, Partner and Leader of the International Tax Group. Watch now to find out how the Global Intangible Low-Taxed Income may impact your offshore investments.
Read the Transcript
The GILTI regime is a significant departure from the way things were taxed in the past as it relates to offshore investment activity, and as a result of that, the structures that used to be ideal just a year or so ago are now no longer effective.
GILTI is an acronym for Global Intangible Low-Taxed Income. Businesses that are likely to be affected by the new GILTI regime are going to include those that have subsidiaries overseas or US individuals with significant shareholdings in foreign corporations. Those taxpayers are going to be required to include the additional amount of income under the GILTI regime and the amount of that income will often be without any sort of significant relief, particularly when dealing with individuals. It’s important for all people with significant investments offshore, offshore structures, offshore businesses to revisit those structures in order to see if they’re still appropriate with these new rules or whether the new rules will impose additional burdens on them and with those additional burdens, if there are ways to mitigate those. The GILTI regime does have some concessions for corporations, including a special deduction that will effectively reduce the effective tax rate for corporations to enter 10.5%. But for individuals, the rate can be the full 37%, plus state and local taxes and net investment income tax, so that can easily be a 50% effective tax rate for residents in states like New York or California.
Now is the time to come speak to us at Friedman about whether your structure is giving you the benefits that you were expecting and whether there are better opportunities and ways of avoiding pitfalls associated with GILTI and these reforms.
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