The US IRS on July 20 issued a final regulation addressing the treatment of income earned by certain foreign corporations that is subject to a high rate of foreign tax.
The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their Global Intangible Low Taxed Income (GILTI) computation on an elective basis.
The regulation finalizes a portion of 2019 proposed regulations under sections 951A and 954 but does not finalize the portions of the 2019 proposed regulations under sections 951, 956, 958, and 1502 regarding the treatment of domestic partnerships. The Treasury Department and the IRS said they will finalize those regulations separately.
The US also issued proposed regulations under the subpart F income and GILTI provisions regarding the treatment of certain income that is subject to a high rate of foreign tax. This document also contains proposed regulations under the information reporting provisions for foreign corporations to facilitate the administration of certain rules in the proposed regulations. The proposed regulations would affect United States shareholders of controlled foreign corporations. The IRS and Treasury welcome comments on the proposed regulations.
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