GAARtype

GAARtype is a term used in the context of tax law, specifically in the United States, to refer to the Global Intangible Low-Taxed Income (GILTI) rules. These rules were introduced as part of the Tax Cuts and Jobs Act (TCJA) of 2017 to address the issue of tax avoidance through the use of low-tax jurisdictions. The GILTI rules apply to certain foreign corporations that have U.S. shareholders and are subject to a lower effective tax rate in their home country than the U.S.

The term "GAARtype" is often used to describe the application of the Global Anti-Avoidance Rules (GAAR) to GILTI. The GAAR are a set of rules designed to prevent tax avoidance by ensuring that income is taxed in the country where it is effectively generated. When applied to GILTI, the GAARtype rules aim to ensure that the income of foreign corporations is taxed in the U.S. at a rate that is at least as high as the rate that would apply if the income were generated in the U.S.

The GILTI rules and the GAARtype application have significant implications for multinational corporations and their shareholders. For foreign corporations, they can result in higher tax liabilities in the U.S. For U.S. shareholders, they can lead to a reduction in the tax benefits of holding foreign investments. The rules have been the subject of much debate and legal challenge, with critics arguing that they are overly complex and burdensome, while proponents maintain that they are necessary to ensure a level playing field in the global tax system.