2. Int'l Tax Update Significant Developments in the Global Tax System - Andrew Seidler
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Foreign Derived Intangible Income Deduction – FDII<br />
<strong>Tax</strong> change Post reform law Considerations<br />
Foreign Derived<br />
Intangible Income<br />
(FDII) (effective for<br />
tax years beg<strong>in</strong>n<strong>in</strong>g<br />
after Dec. 31,<br />
2017)<br />
• Deduction results <strong>in</strong> an<br />
effective 13.125 percent<br />
• Applicable for Domestic C<br />
corporations with gross<br />
<strong>in</strong>come generated by<br />
revenues to foreign<br />
customers for foreign use<br />
• Products & services<br />
revenue with respect to<br />
property not located<br />
with<strong>in</strong> <strong>the</strong> US<br />
• Requires base<br />
calculations of “tangible”<br />
<strong>in</strong>come and <strong>in</strong>tangible<br />
<strong>in</strong>come<br />
• Consider us<strong>in</strong>g C corporations to take<br />
advantage of FDII deductions<br />
• Need to identify and document<br />
qualification of this deduction<br />
• Sales to domestic unrelated parties before<br />
f<strong>in</strong>al overseas sale elim<strong>in</strong>ates benefit<br />
• New diligence item<br />
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