GILTI

GILTI, or Global Intangible Low-Taxed Income, is a U.S. tax provision that taxes a portion of the income foreign subsidiaries earn from intangible assets like patents or trademarks. Designed to discourage U.S. companies from shifting profits to countries with low taxes, GILTI ensures they pay a minimum level of tax on this international income. It works by calculating the income earned above a certain threshold and taxing it at 21%, with some deductions and credits available. Essentially, GILTI aims to promote fair taxation of foreign earnings and prevent tax base erosion.