GILTI (Gross Income Limitations for Taxation of Income)

GILTI, or Global Intangible Low-Taxed Income, is a U.S. tax rule that targets profits earned by foreign subsidiaries of U.S. companies, especially those shifting income to low-tax jurisdictions. It imposes a tax on a portion of these foreign earnings to encourage companies to pay more taxes abroad or bring profits back to the U.S. The aim is to prevent profit shifting and ensure a fair tax contribution from multinational corporations. GILTI calculations consider the foreign income, subtract certain expenses, and apply specific thresholds, resulting in a minimum U.S. tax on qualifying foreign profits.