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Using Offshore Entities: Pros and Cons, Entity Selection, Treaty Benefits, GILTI vs. Subpart F

GILTI High Tax Exception Regs, Section 250 Deduction, Section 962 Election of Corporate Tax Rate

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, December 16, 2020

Recorded event now available

This course will provide tax managers and advisers with a roadmap for considering establishing a business in a foreign country with a low or no tax regime. Our panel of international tax experts will explain the latest regulations surrounding GILTI and the opportunities available to mitigate GILTI taxation. They will compare and contrast entity structures and explain U.S. income tax treaty benefits to lower overseas taxation.

Description

The 2017 Tax Act drastically changed the decision tree for operating a business in a tax haven. Before, easily movable sales took place in low or no tax countries. Transactions between affiliates were structured to generate losses or income in respective high or low tax locales. Earnings were not taxed until repatriated, and tax practitioners strategized Subpart F and PFIC taxation. However, the implementation of GILTI requires tax practitioners to embrace new planning strategies and complex tax calculations.

Is locating a business in a tax haven a viable alternative? To answer the question, tax advisers must consider whether an individual or an entity should own the company and, if an entity, which type. This varies with the chosen country, its tax rates, and structure, whether there is a U.S. income tax treaty, and what benefits are available under the treaty.

Now that taxation is not deferred until earnings are repatriated, planning is critical. Section 250 deductions for GILTI, foreign tax credits, the new high tax exclusion regulations, and the Section 962 election to be taxed at the corporate rate offer opportunities to mitigate overseas taxation. Businesses and advisers need to grasp essential concepts to determine the benefits and pitfalls of operating overseas.

Listen as our panel of international tax experts explores the latest GILTI relevant regulations and opportunities to mitigate GILTI taxation. The panel will compare and contrast entity structures and explain U.S. income tax treaty benefits to lower overseas taxation.

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Outline

  1. TCJA's impact on foreign tax strategies
  2. Post-2020 American Tax Changes?
  3. GILTI
  4. Subpart F
  5. Global pressures on offshore financial centers
  6. Corporate vs. noncorporate entities
  7. Mitigating GILTI
    1. Section 250 deduction
    2. Section 962 election to be taxed at corporate rate
    3. New GILTI high tax exception regulations
  8. Treaty considerations
  9. Considerations other than tax
  10. Planning opportunities

Benefits

The panel will discuss these and other critical issues:

  • Recently released GILTI high tax exception regulations
  • Section 250 deduction to lower GILTI
  • Choice of overseas entities
  • Section 962 election to be taxed at the corporate rate
  • GILTI vs. Subpart F taxation
  • Common treaty benefits available to mitigate overseas taxation

Faculty

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.
Partner
Culhane Meadows Haughian & Walsh

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

Weston, George
George Weston
Partner
Harneys

Mr. Weston is a partner in the firm’s Corporate Practice Group and advises on all aspects of BVI corporate and...  |  Read More