As the legislative process is in the early stages of development and changes are sure to follow, below we outline the major international provisions of the new “One Big, Beautiful Bill” as proposed by the House Ways and Means Committee.
- GILTI (Global Intangible Low-Taxed Income): 50% GILTI deduction made permanent (Effective rate of 10.5% before foreign tax credits).
- New law excludes certain Virgin Island services income from “tested income” and GILTI.
- FDII (Foreign-Derived Intangible Income): 37.5% FDII deduction made permanent (Effective rate of 13.125%).
- BEAT (Base Erosion and Anti-Abuse Tax): 10% BEAT rate made permanent (11% for banks/dealers).
- New Section 899 – Remedies against “Unfair Foreign Taxes”
- Increased tax rates on certain foreign companies and individuals who are residents in a country with an “unfair foreign tax” (up to 20%).
- Modified BEAT rules for US corporations majority-owned by foreign persons in a country with an “unfair foreign tax”.
- Disallowed Foreign Real Property Taxes: The law essentially disallows the deduction of foreign real property taxes except when accrued, incurred, or paid by an active trade or business in the course of its business operations.
- It does not include foreign income, war profits, and excess profits taxes
- Excise tax of 5% on remittances sent to foreign transferees unless the transferor is a US citizen. Remittance excise tax is treated as refundable credit on the transferor’s US personal tax return.
We will continue to monitor the legislation surrounding the international provisions and provide updates as more details emerge.
