International Taxation Question
Identify businesses and/or industries that can benefit most from the FDII deduction.
Foreign-Derived Intangible Income (FDII):
Foreign-Derived Intangible Income refers to the tax incentive provided to the C corporation that earns the revenue-generating in the foreign market. The tax rate on foreign driven sales and service income has been reduced to 13.125% from 21%. The main aim of FDII deduction is to encourage U.S. companies to generate a higher level of foreign income and establish their intangible assets in the U.S.
The beneficiary of FDII deduction:
The companies with no CFC (Controlled Foreign Corporation) ownership benefit the most from the FDII deduction. Earlier, these companies were liable for the higher tax rate as compared to their global competitors who moved their intellectual property outside the U.S. for tax-saving purposes.
Technology companies such as software development companies and pharmaceutical companies would benefit from the FDII deduction.
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International Taxation Question Identify businesses and/or industries that can benefit most from the FDII deduction.
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