The CPA Desk

A Thought Leader Production by PKFTexas

What is Foreign Derived Intangible Income?

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Frank Landreneau, one of our international tax directors. Frank, welcome back to the Playbook.

Frank: Thank you, Jen. Great to be here.

Jen: So, we’ve done a whole series on international tax and the impact on tax reform. Are there any incentives to bring business to the United States?

Frank: Jen, I’m glad you asked about that. Remember last time we talked about the so-called GILTI tax?  Well, there’s something that’s kind of the corollary to that, and it’s called Foreign Derived Intangible Income. The purpose behind it is to incentivize companies to do business here in the United States.

Jen: So, what do they need to do with that Foreign Derived Intangible Income?

Frank: Well, it sounds kind of like a funny deal. Originally it was meant to incentivize companies that had intellectual property here in the states and tax it at a favorable rate, but it’s actually much more than that. It’s a special rate on goods and services that are provided to foreign customers that use those goods and services outside the U.S.

Jen: Okay. Is there any specific industry that this targets or it’s kind of across the board?

Frank: It really is across the board. It’s really meant for exporters of goods primarily, but it also could apply to exporters of services. So, if you’re providing professional services, for example, for a client that may be outside the U.S.

Jen: Well, great. I know there’s a lot more detail that we need to get into, and can we get you back to talk about it?

Frank: That’d be great. I’d love to dig in.

Jen: Perfect. To learn more about our international topics, visit PKFTexas.com/internationaldesk. This has been another Thought Leader production brought to you by PKF Texas the Entrepreneur’s Playbook.