Multinational corporations got some long-awaited clarity from the IRS, which issued new rules on Friday clarifying how they must compute a new international tax.

The rules explain how companies should calculate a complex new tax on GILTI, or global intangible low-taxed income. The regulations finalize previous proposals that give companies some leeway to allocate only a portion of certain domestic expenses to their foreign subsidiaries and allow them to take advantage of unused foreign tax credits, both of which will effectively lower the amount of U.S. tax corporations owe.

Companies had complained that the 2017 tax overhaul was vague about how they should account for their foreign profits.

The GILTI tax effectively applies a 10.5 percent tax rate on a company’s “excess” profits earned overseas through some of its foreign subsidiaries. It’s intended to prevent large companies with valuable intellectual property, like technology and pharmaceutical companies, from shifting their profits out of the U.S. tax base to low-tax and no-tax havens like Ireland, the Netherlands, Bermuda and Singapore.

But GILTI is also significant to multinationals with large overseas plants, global law and advertising firms, and some private equity partnerships. Companies of all stripes have said in recent securities filings that they haven’t known how to compute the levy or to assess what the impact would be on their financial statements.

Republican lawmakers created GILTI to protect against profit-shifting under the new tax regime. The law now taxes companies on their domestic profits only and cut the corporate rate to 21 percent from 35 percent.

The Internal Revenue Service issued two initial rounds of GILTI rules last fall that allowed large multinationals to consolidate, or calculate the tax one time for all of their entities, rather than do scores of calculations for individual subsidiaries.

GILTIi works in tandem with another new provision known as FDII, or foreign derived intangible income. That provision encourages U.S. companies to manufacture domestically by giving them a deduction when they sell abroad. The measure effectively equalizes the tax rates for profits on overseas sales, no matter where the product or service is produced.

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