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US tax reform: the GILTI and FDII provisions

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December’s US tax reform introduced many new concepts, two of which were the new areas of global intangible low taxed income (GILTI) and foreign derived intangible income (FDII). GILTI allows controlled foreign companies of US companies to earn a return on their hard assets, with any excess being potentially subject to US tax, subject to certain deductions and provisions. FDII effectively mirrors these provisions, by introducing a new regime for taxing income earned in the US in respect of intangibles for certain foreign activities. It is recommended that UK professionals advising businesses with large US operations devote time to understanding the rules and work with affected businesses to analyse their impact.

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