United States

Georgia: Conformity and Rate Reduction Bill Enacted

Mar 12, 2018
From KPMG TaxWatch

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Georgia House Bill 918, which was signed into law on March 2, 2018, provides that for tax years beginning on or after January 1, 2017, Internal Revenue Code means the Internal Revenue Code as of February 9, 2018, except for a number of specifically enumerated sections. Many of these sections, such as section 168(k), historically have not been adopted in Georgia. However, House Bill 918 makes a few revisions to the list of sections that are not adopted or are adopted as of a specific date, including Internal Revenue Code sections 118, 163(j) and 382(k)(1) which will apply as they were in effect before the enactment of the Tax Cuts and Jobs Act or Public Law 115-97. House Bill 918 provides some guidance on the Georgia treatment of new federal global intangible low-taxed income or GILTI. Notably, income specified under new section 951A (GILTI) will not be treated as a foreign dividend that can be subtracted in computing Georgia taxable net income. However, the deduction under section 250, which is the deduction that reduces the rate of tax applied to GILTI and foreign-derived intangible income (FDII),  applies to the extent the income is included in Georgia taxable net income. No deduction under section 245A or 965 is allowed to the extent the associated income has been subtracted as a foreign dividend. With respect to NOLs, House Bill 918 confirms that the 80 percent federal NOL limitation that applies to losses arising after December 31, 2017 is incorporated into Georgia law and applies to Georgia taxable net income. House Bill 918 also includes individual and corporate income tax rate reductions. Effective for tax years beginning on or after January 1, 2019, the corporate income tax rate is reduced from 6.0 percent to 5.75 percent. An additional rate reduction to 5.5 percent applies to tax years beginning on or after January 1, 2020, but only after passage of a joint resolution that is signed by the Governor ratifying the section of the law reducing the rate to 5.5 percent. The joint resolution must be passed by both houses of the Georgia General Assembly on or after January 13, 2020. The reduced rate (whether it is 5.75 percent or 5.5 percent) expires on the last moment of December 31, 2025. Please contact Lucas Hankins at 404-222-3230 with questions on House Bill 918.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.