GILTI
GILTI — Global Intangible Low-Taxed Income — is a US tax on certain foreign-corporation income flowing through to US shareholders, created by the 2017 Tax Cuts and Jobs Act. It applies to 10%+ US shareholders of Controlled Foreign Corporations (CFCs) and is intended to discourage shifting profits to low-tax jurisdictions. GILTI inclusions are reported on Form 8992. Under the 2025 One Big Beautiful Bill Act (OBBBA), the regime was renamed Net CFC Tested Income (NCTI) with revised mechanics for CFC tax years beginning after December 31, 2025.
GILTI is part of the 2017 TCJA's broader international tax overhaul. Before TCJA, US shareholders of foreign corporations were generally taxed only on actual distributions (with some exceptions like Subpart F). GILTI changed this by requiring 10%+ US shareholders of CFCs to include their pro-rata share of certain foreign-corporation income annually, regardless of distribution.
The computation changed materially under the One Big Beautiful Bill Act (OBBBA, P.L. 119-21, signed July 4, 2025): for CFC tax years beginning after December 31, 2025 the regime is renamed Net CFC Tested Income (NCTI), the qualified business asset investment (QBAI) offset is repealed entirely, and the §250 deduction is cut from 50% to 40%. Under the current rules the computation starts with the CFC's tested income (essentially gross income excluding certain categories), and — with no QBAI deemed-return subtraction — the shareholder's pro-rata share of that tested income is the full inclusion. Corporations get a 40% deduction (individual shareholders generally don't unless they make a §962 election to be taxed as a corporation), which puts the effective US rate on this income at 12.6%, up from 10.5% under the old 50% deduction.
For wealth-tech, GILTI matters when a HNW or institutional customer has 10%+ ownership of a foreign corporation. The shareholder needs Form 8992 generated, the CFC's tested income computed (or supplied), and the resulting inclusion reported on Form 1040. The §962 election decision is itself complex and benefits from the FTC interaction analysis.
The wealth-tech-relevant cohort is small but high-value: family offices with foreign-corporation interests, HNW households with international business holdings, certain expat families with offshore holding structures. Synthetic test data for these use cases is qualitatively different from the mass-affluent default — different account types, different forms, different per-corporation tracking.
GILTI-aware synthetic data needs households with 10%+ ownership of synthetic foreign corporations, with the CFC's tested income and tax history modeled. The §962 election decision should be modeled as a per-year choice with downstream FTC implications. Most domestic-only test corpora omit this entirely; cross-border wealth-tech platforms serving HNW or family-office customers need it.
Common pitfalls
- Treating GILTI as if it were Subpart F — they're separate inclusion regimes with different scope and computation.
- Forgetting the §962 election option for individuals — without §962, individuals get less-favorable treatment than corporations.
- Missing the FTC interaction — GILTI inclusions can produce FTC eligibility on the underlying foreign tax, but the rules are complex and basket-specific.
- Conflating GILTI with the 10% threshold — the 10%+ ownership is a US-shareholder threshold, separately determined from the CFC test.
Examples
US shareholder owns 25% of a Cayman-domiciled holding company that's a CFC. CFC's tested income for the year: $4,000,000. Under the post-2025 OBBBA rules (the regime is now Net CFC Tested Income, NCTI), there is no QBAI offset, so the shareholder's inclusion is the full pro-rata share: 25% × $4,000,000 = $1,000,000. Reported on Form 8992; flows to Form 1040 (or 1120 if §962 elected). Without §962, the $1,000,000 is taxed at the shareholder's ordinary rate (up to 37%); with §962, it's taxed at the corporate rate with the 40% §250 deduction (effective rate ~12.6% federal, i.e. 21% × 60%).