David Rosenbloom Quoted by Tax Notes on the Conflict Between GILTI and U.S. Tax Treaties

As a minimum tax, GILTI forces U.S. companies to reduce their foreign tax liabilities. But it fell to a former Carter administration official to really go on a tear about the TCJA. “GILTI is a stake in the heart of deferral,” said H. David Rosenbloom of Caplin & Drysdale, Chtd. “It’s something reformers could only dream about.” But, in his view, GILTI encourages taxpayers to move their tangible assets offshore. And it incorporates some weird assumptions about how subpart F works. Rosenbloom saw internal contradictions in the TCJA. “The language is Orwellian. Anti-deferral is territoriality,” he said.

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FTCs attributable to GILTI are haircut by 20 percent (section 960(d)). Rosenbloom argues that U.S. treaties require a full deemed paid foreign tax credit for GILTI earned by a first-tier CFC. He predicted that the question would be litigated (section 7852(d)).

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Excerpt taken from the article “News Analysis: GILTI as Charged” by Lee A. Sheppard for Tax Notes.