Georgia S.B. 328 enacted—provides for full subtraction of GILTI income
Multistate Tax alert | April 6, 2018
This tax alert summarizes the repeal of the specific provision of previously-enacted House Bill 918 (H.B. 918) related to Georgia’s treatment of Section 951A of the Internal Revenue Code of 1986 (IRC).
- Corporate taxpayers may now subtract the full amount of global intangible low-taxed income
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Corporate taxpayers may now subtract the full amount of global intangible low-taxed income
On March 26, 2018, Governor Nathan Deal signed Senate Bill 328 (S.B. 328), which repeals a provision of recently-enacted House Bill 918 (H.B. 918) (see the Deloitte Tax alert) related to Georgia’s conformity to Section 951A of the Internal Revenue Code of 1986 (IRC). With the repeal, corporate taxpayers may now subtract the full amount of global intangible low-taxed income (GILTI) received in determining Georgia taxable income pursuant to Georgia’s subtraction modification for Subpart F income. However, the related federal deduction provided by IRC Section 250 generally will not be allowable for taxpayer’s subtracting 100 percent of GILTI as Subpart F income.
For Georgia tax purposes, corporate taxpayers are permitted to subtract dividends received from sources outside the United States as defined in the IRC, including amounts related to Subpart F income, in calculating Georgia taxable income. H.B. 918, however, had provided that the subtraction “shall not include income specified in Section 951A of the Internal Revenue Code of 1986” and that “[t]he deduction provided by Section 250 shall apply to the extent the same income was included in Georgia taxable net income.” This provision effectively required a corporate taxpayer to include the entire amount of GILTI in its tax base while permitting the related deduction under IRC Section 250.
After the enactment of H.B. 918 on March 2, the Georgia General Assembly received additional input from the business community regarding this treatment of GILTI. On March 26, 2018, S.B. 328 was enacted to allow corporate taxpayers a full subtraction for GILTI income by specifically including Section 951A income in Georgia’s definition of “Subpart F income” for purposes of the dividends received a deduction. S.B. 328 also deleted the phrase in Ga. Code Ann. § 48-7-21(b)(8)(A) that had excluded IRC Section 951A income from the dividends received a deduction. However, while Georgia still conforms to IRC Section 250, the federal GILTI deduction is only allowed for Georgia purposes “to the extent the same income was included in Georgia taxable net income,” effectively precluding taxpayers from receiving a double benefit from both the Subpart F income subtraction and the Section 250 deduction.
S.B. 328 is effective immediately and applicable to all taxable years beginning on or after January 1, 2018.
If you have any questions regarding Georgia S.B. 328 or other Georgia tax matters, please contact any of the following Deloitte Tax professionals:
Matthew J. Polli, partner, Deloitte Tax LLP, Atlanta, GA, +1 404 631 2170
Brian J. Sullivan, managing director, Deloitte Tax LLP, Atlanta, GA, +1 404 220 1673
Todd W. Senkiewicz, managing director, Deloitte Tax LLP, Atlanta, GA, +1 404 631 3371
Matthew C. Laney, manager, Deloitte Tax LLP, Charlotte, NC, +1 704 887 1745
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