The OBBBA has significant implications for multinational taxpayers and their businesses. The OBBBA made several welcome changes to the Foreign Tax Credit (“FTC”) rules, making it more likely that US companies will be able to use credits. Included with these changes is: 1) A drop in the credit reduction rate from 20% to 10%, thereby allowing an FTC of up to 90% compared to the former 80%. 2) Research and experimental (R&E) and interest expenses will no longer be allocated to net CFC tested income for purposes of the foreign tax credit limitation. 3) The Section 78 gross-up for foreign taxes deemed paid with respect to previously taxed earnings and profits (PTEP) distributions is also eliminated.

The OBBBA also included name changes to GILTI and FDII which have now been renamed Net CFC Tested Income (NCTI), and Foreign-Derived Deductible Eligible Income (FDDEI) respectively. Changes to GILTI, now NCTI, include: 1) The elimination of the QBAI (Qualified Business Asset Investment) exclusion. 2) Decrease in the Section 250 deduction for NCTI and FDDEI to 40% and 33.34%, respectively, from the previously applicable rates of 50% and 37.5%.

Although BEAT retains its name, its tax rate has permanently increased from 10% in 2025 to 10.5%.

The OBBBA also includes a new Remittance Tax, permanent extension of the Section 954(c)(6) look-through rule for CFCs, additional downward attribution rules were added to incorporate foreign-controlled CFCs (FCFCs) in the downward attribution rules.

Topics & Learning Objectives Include:

Updates to the:

• Foreign Tax Credits (FTCs)
• Global Intangible Low-Taxed Income (GILTI)
• Foreign-Derived Intangible Income (FDII)
• Base Erosion and Anti-Abuse Tax (BEAT)
• Controlled Foreign Corporation (CFC) Rules and Subpart F

New:

• Remittance Tax
• Domestic provisions impacting and modified for foreign taxpayers
• Planning opportunities

Scott Ahroni has extensive experience assisting clients with international income, business and estate tax planning as well as, international information returning filings.