TEl Files Comments on the Proposed GILTI High-Tax Exception.

On September 18, TEI submitted comments to the Treasury and IRS regarding proposed regulations under Section 951A, better known as "GILTI," commending the Government on the proposed GILTI high-tax exception and recommending certain changes to the exception consistent with sound tax policy. TEI's comments were prepared under the aegis of the Institute's Tax Reform Task Force and U.S. International Tax Committee. Benjamin Shreck, TEI tax counsel, coordinated the preparation of TEI's submission.

The Internal Revenue Service (the Service) and U.S. Department of the Treasury (the Treasury) published a notice of proposed rulemaking on June 21, 2019. (1) The Proposed Regulations, in part, address gross income subject to a high rate of foreign tax under the newly enacted global intangible low-taxed income provisions (the GILTI high-tax exception). The GILTI provisions were added to the Internal Revenue Code (the Code) as part of Public Law No. 115-97, colloquially known as the Tax Cuts and Jobs Act (the TCJA or the Act). The Service and Treasury (the Government) requested comments from interested stakeholders no later than September 19, 2019. On behalf of Tax Executives Institute, Inc. (TEI), I am pleased to respond to the Government's request for comments on the Proposed Regulations.

TEI Background

TEI was founded in 1944 to serve the needs of business tax professionals. Today, the organization has 57 chapters in North and South America, Europe, and Asia. Our more than 7,000 individual members represent over 2,800 of the leading companies around the world. TEI members are responsible for administering the tax affairs of their companies. They must contend daily with the new provisions of the TCJA relating to the operation of business enterprises, including the new GILTI regime. We believe the diversity and professional experience of our members enables TEI to bring a balanced and practical perspective to the issues raised by the Proposed Regulations.

TEI Comments

TEI commends the Government for promulgating regulations that would implement an exception to the required GILTI inclusion if such income is subject to a high rate of foreign tax. Such an exception is consistent with the stated legislative intent of Congress that "there [be] no residual U.S. tax on GILTI" subject to a high effective foreign tax rate. (2) The GILTI high-tax exception is in TEI's view consistent with sound tax policy. The approach is also consistent with the TCJAs attempt...