Foreign-Derived Intangible Income ("FDII")

​Effective for tax years beginning after December 31, 2017, domestic (U.S.) corporations are allowed a new tax deduction in the amount of 37.5% of “foreign derived intangible income” (“FDII”). It is important to understand that the deduction has little to do with intangible income or property, but is in fact an export incentive that effectively reduces the tax on foreign derived sales and service income in excess of a base amount to 13.125% (as compared to the regular corporate income tax rate of 21%). Accordingly, the deduction is potentially available to every U.S. corporation that exports property or provides services to a person located outside the U.S., including sales or services provided to related parties. For more information please see Tax Reform Specials.