Global Intangible Low-Taxed Income (GILTI)

The TCJA enacted provisions requiring that a 10% US shareholder of a controlled foreign corporation (CFC) include in income its share of the CFC’s global intangible low-taxed income (GILTI). These provisions effectively impose a minimum tax on all foreign earnings in excess of a certain return on foreign tangible assets.

Foreign Derived Intangible Income (FDII)

FDII deduction provides an incentive to domestic corporations in the form of a lower tax rate on income derived from tangible and intangible products and services in foreign markets. As a result, a corporation can claim a 37.5% deduction, which results in a permanent tax benefit and 13.125% effective tax rate, as compared with a 21% corporate rate, for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, after which the deduction is reduced to 21.875%, resulting in an effective tax rate of 16.406%.

The FDII deduction is available to domestic entities across a broad range of industries that are taxed as C corporations. This includes U.S.-based companies and non-U.S. companies doing business in the United States.

Closely-held business

A "closely-held business" is a business entity whose shares are held by only a small number of stock holders. The stock holders typically have a common interest in the company (i.e., family members), and the shares of stock are generally not traded in the public stock market.