The final regulations addressing the GILTI high-tax exception retain the general approach of the proposed regulations with some simplifying changes.

Key Points:

..Taxpayers can elect on an annual basis whether to exclude income subject to high foreign taxes from the computation of GILTI minimum tax on foreign earnings.

..Taxpayers can make this election retroactively for tax years beginning on or after January 1, 2018.

..The election, if made, applies to all of the taxpayers’ controlled foreign corporate subsidiaries.

..A complex process of matching items of income to foreign taxes paid hinders the ability to exclude low-taxed income by blending items of income subject to different foreign tax rates.

..Proposed regulations under the decades-old Subpart F rules would jettison Subpart F’s historically more flexible high-tax exception and adopt the approach taken under the new GILTI rules.