Background
While GILTI is a US tax, it can be a significant problem for US
shareholders resident in Canada. As explained below, provisions
which reduce Canadian taxes owing may ultimately result in
additional US tax payable where they disqualify the taxpayer from
access to the GILTI high-tax exception. While in some cases
planning may help reduce the most extreme negative implications, US
shareholders of Canadian controlled private corporations
("CCPCs") need to be aware of these potentially expensive
newly released regulations.
On July 20, 2020 the US Treasury and the Internal Revenue
Service ("IRS") released a hefty package of final and proposed regulations (collectively
the "2020 Final Regulations" or simply the
"Regulations") dealing with the high-tax exception to
so-called global intangible low-taxed income, or GILTI, as it has
come to be known. Introduced in the Tax Cuts and Jobs Act of 2017
("TCJA"), GILTI piggybacks on, and expands the subpart F
rules that
