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Changes how U.S. shareholders of foreign subsidiaries compute and deduct global intangible low-taxed income (GILTI) by adding a new “round‑tripping ratio” to the net deemed intangible income return formula and by limiting the allowable GILTI deduction. It creates a calculation to identify “round‑tripped” tested income, excludes small taxpayers under a $100 million gross receipts test with a 0% rule, and applies to taxable years beginning after enactment.
Amends the computation in section 951A(b)(2)(A) to read: 10 percent of the excess (if any) of — (i) the aggregate of, and — and adds a new clause (ii) that includes an amount equal to the product of the amount determined under clause (i) and the round‑tripping ratio. This changes the arithmetic used to determine the net deemed intangible income return.
Adds a new definition of “Round‑tripping ratio” to section 951A(b). The ratio (not greater than 100 percent) equals: (i) the shareholder’s round‑tripped net CFC tested income for the taxable year (as defined in the new paragraph) divided by (ii) the shareholder’s net CFC tested income for the taxable year determined without regard to the new paragraph.
Defines “shareholder’s round‑tripped net CFC tested income” as the net CFC tested income that would be determined under subsection (c) if (A) the only income taken into account under clause (i) of subsection (c)(2)(A) were income derived in connection with (I) property or (II) services provided by the taxpayer which the taxpayer cannot establish to the satisfaction of the Secretary are provided to any person, or with respect to property, not located within the United States, and (B) the only deductions taken into account under clause (ii) of subsection (c)(2)(A) were deductions properly allocable to the income described in (A).
Specifies that whether property is for a foreign use is determined in the same manner as under section 250(b) of the Internal Revenue Code.
Provides an exception making the round‑tripping ratio 0% for certain small United States shareholders. A U.S. shareholder qualifies for this exception if the shareholder’s average annual gross receipts for the 3‑taxable‑year period ending with the taxable year preceding the taxable year do not exceed $100,000,000. Rules similar to paragraphs (2)(B) and (3) of section 59A(e) apply for this clause.
Who is affected and how:
U.S. multinational corporations and their U.S. shareholders: Directly affected. They must compute the new round‑tripping ratio and rework GILTI inclusion and deduction calculations. For firms with significant income classified as round‑tripped, U.S. taxable income may increase and tax liabilities may rise because the GILTI deduction is reduced.
Taxpayers with controlled foreign corporations (CFCs): Required to gather more detailed information about tested income and how much of that income is "round‑tripped"; this raises compliance costs and may require changes to tax reporting systems and transfer‑pricing or entity structures.
Small and mid‑sized taxpayers (gross receipts ≤ $100 million): Largely shielded from the round‑tripping adjustment by the 0% exception, limiting the policy’s burden on smaller firms.
Tax advisers and corporate tax departments: Will face increased workload to implement new calculations, update tax positions, and advise on restructuring or planning to mitigate higher GILTI exposure.
Federal revenues and tax policy effects: Likely to increase effective tax on certain categories of foreign‑sourced income that previously benefited from GILTI deductions, reducing incentives for certain cross‑border arrangements; estimated revenue impact would depend on taxpayer responses and the extent of round‑tripped income.
International operations and investment decisions: May affect decisions about where to locate profits and legal entities; could prompt taxpayers to alter entity structures or repatriation strategies to minimize the new adjustment.
Overall, the legislation targets perceived abuse or overly favorable treatment of certain foreign‑sourced income by narrowing the GILTI deduction through a technical, formulaic change, with notable compliance and planning implications for affected corporations and their advisors.
Last progress June 11, 2025 (8 months ago)
Introduced on June 11, 2025 by Ronald Lee Wyden
Read twice and referred to the Committee on Finance.