Tax Income

Leverage Foreign Tax Credits to offset U.S. tax liabilities under GILTI. Ensure proper calculation and documentation of FTCs to maximize benefits and mitigate double taxation risks.

Utilize the GILTI high-tax exception election if applicable. This allows exclusion of income subject to a foreign tax rate that exceeds 90% of the U.S. corporate income tax rate, reducing GILTI exposure.

Consider restructuring business operations, such as shifting intangible assets to lower-tax jurisdictions or consolidating Controlled Foreign Corporations (CFCs) to reduce GILTI inclusions.

Make a Section 962 election to treat GILTI inclusions as corporate income, allowing access to lower corporate tax rates and FTCs, while potentially reducing overall tax liability.

Regularly review and monitor payments that may be categorized as base erosion payments under BEAT. Minimize reliance on related-party transactions subject to BEAT penalties.

Focus on increasing domestic revenue to reduce the proportionate impact of base erosion payments, thus lowering BEAT liability.

Consider aggregating smaller base erosion payments to minimize administrative complexity and avoid crossing BEAT threshold amounts.

Explore exemptions or carve-outs under BEAT for certain targeted industries or transactions. Proper classification of transactions may reduce exposure to BEAT liability.

Work with tax advisors to develop comprehensive strategies for both GILTI and BEAT compliance. Ensure alignment of global tax structures with U.S. tax regulations to mitigate risks.

Maintain detailed documentation of all foreign income, taxes paid, and transactions to ensure compliance and reduce audit risks for both GILTI and BEAT regulations.