Treasury Narrows Reach of Foreign Income Levy to Fix 2017 Law
- Companies can opt to exclude high-tax foreign income in tally
- Foreign income in countries with 18.9% rate impacted
Pedestrians walk near the U.S. Treasury building in Washington.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The Treasury Department has narrowed the reach of a new tax aimed at technology and pharmaceutical companies with overseas income, wiping out an unintended consequence of President Donald Trump’s 2017 tax overhaul.
The tax law, aimed at discouraging companies from using intellectual property to shift profits out of the U.S., created the so-called Gilti levy, which stands for global intangible low-tax income. It required companies that paid foreign taxes at a rate below 13.125% to pay an additional 10.5% Gilti tax. But the hastily written law unintentionally hit some companies paying foreign taxes well above that 13.125% rate.