New regs on income subject to high foreign tax spark ire
The Department of the Treasury and the IRS have issued final regulations addressing the treatment of income earned by certain foreign corporations that is subject to a high rate of foreign tax. Not everyone’s happy.
The final regs allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their global intangible low-taxed income, or GILTI, computation.
Treasury and the IRS today also issued a proposed regulation regarding the high-tax exception with the GILTI high-tax exclusion.
“To prevent inappropriate tax planning and reduce complexity, these proposed regulations revise and conform the provisions of the Subpart F high-tax exception with the provisions of the GILTI high-tax exclusion in the final regulations,” the proposed regs read.
The final regs have already drawn criticism from Senate Finance Committee Ranking Member Ron Wyden, D-Oregon.
“The Treasury Department again overstepped its authority to create more loopholes for mega-corporations to exploit and reduce their tax bills,” Wyden said in a prepared statement. “The department is allowing companies to determine which set of tax rules apply to them each year. No company is ever going to choose to pay more. This is yet another case where the Trump administration makes the rules more favorable toward mega-corporations as the regulatory process moves forward.”