The international tax changes align U.S. rules more closely with the OECD Pillar Two global minimum tax framework. The provisions have significant implications for U.S. multinationals and their foreign competitors.
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GILTI and BEAT Modifications
The Global Intangible Low-Taxed Income (GILTI) rate increases from 10.5% to 13%. The Base Erosion and Anti-Abuse Tax (BEAT) rate rises from 10% to 12.5%. Both changes reduce the advantage of shifting profits to low-tax jurisdictions.
Core Takeaway
U.S. companies with significant foreign operations in low-tax jurisdictions need to remodel their effective tax rates. The combined effect of GILTI and BEAT changes may increase the effective rate on foreign earnings by 2–4 percentage points.