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Global Tax Reform Reboot: International Tax Provisions of the One Big Beautiful Bill Act

July 30, 2025 (4 min read)

Public Law No. 119-21, the One Big Beautiful Bill Act (OBBBA), represents the most comprehensive overhaul of the federal tax system since the Tax Cuts and Jobs Act of 2017 (TCJA). Enacted on July 4, 2025, the OBBBA originates from H.R. 1, 119th Cong. (2025), and reflects a sweeping legislative agenda focused on simplification, growth stimulation, and structural permanence. Among its international tax provisions, the OBBBA (1) renames the  global intangible low-taxed income (GILTI) provisions introduced under the TCJA to “Net CFC Tested Income” (NCTI), with the associated deduction lowered to 40%, and FTC limit raised to 90%; (2) renames the Foreign‑Derived Intangible Income (FDII) to “Foreign Derived Deduction Eligible Income (FDDEI)”, with the deduction reduced to 33.34%; (3) stabilizes BEAT rates at 10.5% with full credit offset allowed; and (4) overhauls sourcing, attribution, and FTC rules to reduce base erosion.

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Related Content

  • GILTI and FDII Fundamentals
    Review pre-OBBBA and post-OBBBA international tax law. Before OBBBA: (1) GILTI had a 50% deduction (effective ~10.5–13.125%) and (2) FDII was a 37.5% deduction (~16.406%). After OBBBA: (1) the GILTI (renamed Net CFC Tested Income (NCTI)) deduction falls to 40% (rate ~12.6%, or ~14% after foreign tax credits); (2) FDII (renamed Foreign‑Derived Deduction Eligible Income (FDDEI)) deduction yields 14% effective U.S. tax rate on qualifying income; and (3) the foreign tax credit reduction is reduced from 20% to 10%, which allows more FTCs to offset GILTI tax.
  • The BEAT Goes On: New I.R.C. Section 59A Practice Tips
    Learn how the OBBBA modified the Base Erosion and Anti-Abuse Tax (BEAT) under I.R.C. Section 59A by setting a flat rate of 10.5% for tax years beginning after December 31, 2024. The base erosion percentage test and gross receipts threshold remain unchanged.

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  • Tax Key Legal Developments Tracker (Federal) (Current)—keep up to date with key legal developments!
    • Federal Tax Legislation. President Trump signs the One Big Beautiful Bill Act (OBBBA), HR 1, Pub. L. No. 119-21, on July 4, 2025. Federal Tax Legislation Tracker (2025).
    • Business Entities. IRS provides various prescribed rates for federal income tax purposes for July 2025 (the current month).  Rul. 2025-13.
    • Tax Practice, Procedure, and Controversy. Trump Administration issued an executive order, Ending Market Distorting Subsidies for Unreliable, Foreign‑Controlled Energy Sources, which calls for Secretary of the Treasury to take necessary and appropriate action within 45 days of July 4 (OBBBA’s enactment date), which date is August 18, to strictly enforce the termination of the clean electricity production and investment tax credits under I.R.C. Sections 45Y and 48E for wind and solar facilities to ensure that policies concerning the “beginning of construction” are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and  restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.
    • Tax Practice, Procedure, and Controversy. IRS extends for an additional year the transitional relief provided in R.S. Notice 2024-56, providing transitional relief from penalties with respect to certain information reporting obligations under I.R.C. Section 60451 and also transitional relief from the liability for the payment of backup withholding tax required to be withheld under I.R.C. Section 3406and its accompanying regulations as well as from penalties for brokers who fail to pay that tax with respect to certain sales of digital assets required to be reported under I.R.C. Section 6045. Notice 2025-33. 
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