You have a US citizenship or you hold a Green card – Watch out you might be GILTI!
As you may have heard, the US tax reform of 2017 (Tax Cuts & Jobs act.) that President Trump signed into law last year creates a new tax burden called GILTI for 2018 and every year going forward.
GILTI stands for Global intangible low taxed income, and in short makes any annual income left in an Israeli (or any other non-U.S.) company that is controlled (more than 50%) by U.S. persons (CFC) taxed at the individual level for US tax purposes.
This means that even though you may pay 23% corporate tax in Israel, you can still owe an additional US tax of up to 37%. Additionally, if you are pulling a dividend out of your company to bring annual revenue to zero, you can still be subject to this GILTI tax.
If you also have US citizenship, we wanted to make sure you are aware of this new tax and have proper tax planning in place to mitigate or negate this tax. If your U.S. CPA has not reached out to you to make sure that you have a plan in place for this new tax make sure to contact us. We work with a top U.S. tax provider and would recommend working with us and them to explore options that are still available to you to protect you from this tax.