On July 4, 2025, the U.S. enacted the One Large Lovely Invoice Act (OBBBA), marking essentially the most vital overhaul of its worldwide tax guidelines for the reason that 2017 Tax Cuts and Jobs Act. For U.S. headquartered multinational enterprises (MNEs), this laws—mixed with latest developments in international tax coverage—ushers in a brand new period of complexity, compliance, and strategic recalibration.

In a latest Thomson Reuters webinar, specialists from Orbitax unpacked the implications of the OBBBA and the G7’s political settlement on Pillar 2, providing insights into how MNEs can put together for what’s subsequent.

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A shifting international tax panorama

The G7’s June 2025 announcement signaled a serious shift. U.S. parented teams could also be excluded from the Revenue Inclusion Rule (IIR) and Undertaxed Earnings Rule (UTPR) underneath Pillar 2. In alternate, the U.S. eliminated Part 899, a retaliatory provision, from OBBBA.

Whereas this settlement suggests a cooperative future, it’s necessary to notice that greater than 50 jurisdictions have already enacted Pillar 2 laws, and the G7’s assertion doesn’t override present legal guidelines.

As Jacob Fulton, Head of Quantitative Tax at Orbitax, defined, “The announcement was extra political than authorized. Compliance necessities haven’t modified but. If an MNE had a submitting obligation earlier than June 26, it nonetheless exists now.”

OBBBA’s influence on the U.S. worldwide tax guidelines

The OBBBA introduces sweeping adjustments to key worldwide tax regimes:

1. GILTI → Internet CFC Examined Revenue

• Efficient 2026, International Intangible Low-Taxed Revenue (GILTI) is rebranded as Internet CFC Examined Revenue.
• The Part 250 deduction drops from 50% to 40%.
• The online deemed tangible earnings return is repealed.
• The efficient U.S. tax charge will increase to 12.6%.

Strategic influence: This may occasionally discourage international tangible funding and shift capital towards U.S.-based operations.

2. FDII → Overseas-Derived Deduction Eligible Revenue

• Efficient 2026, Overseas-Derived Intangible Revenue (FDII) is rebranded as Overseas-Derived Deduction Eligible Revenue.
• The Part 250 deduction drops from 37.5% to 33.34%.
• Positive factors from mental property (IP) tendencies are disallowed.
• Curiosity, analysis and improvement (R&D) bills are excluded from deductions.
• The efficient tax charge rises to 13.9986%.

Strategic influence: Encourages U.S.-based innovation and R&D whereas decreasing incentives to monetize IP by way of gross sales.

3. BEAT changes

• The bottom erosion and anti-abuse tax (BEAT) charge will increase barely to 10.5%.
• Harsh 2026 provisions are repealed.
• Credit like R&D and clear vitality stay usable to offset BEAT legal responsibility.
• Strategic influence: Supplies planning stability for corporations producing beneficial credit.

Overseas Tax Credit score (FTC) reforms

The OBBBA additionally introduces taxpayer-friendly adjustments to the FTC guidelines:

• The deemed paid international tax limitation is diminished from 20% to 10%.
• Sure deductions (e.g., curiosity, R&D) should now be allotted to U.S. supply earnings, growing usable credit.
• As much as 50% of earnings from U.S.-produced stock bought overseas could also be handled as international supply earnings.

Strategic influence: Improves credit score restoration and reduces residual U.S. tax on international earnings.

Part 163(j) curiosity deduction adjustments

Efficient for tax years starting after December 31, 2024:

• Returns to earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA)-based adjusted taxable earnings (ATI).
• Overseas earnings sorts (e.g., Internet CFC examined earnings) are excluded from ATI.
• The limitation is now decided earlier than making use of curiosity capitalization guidelines.

Strategic influence: Helps home capital-intensive companies deduct extra curiosity, however might immediate MNEs to restructure financing.

CFC and Subpart F reforms

The OBBBA reinstates Part 958(b)(4), eradicating downward attribution, and creates a brand new Part 951B for foreign-controlled U.S. shareholders. It additionally:

• Makes the Subpart F look-through rule everlasting.
• Eliminates the “final day” rule, requiring inclusion of Subpart F earnings if a U.S. shareholder owns inventory on any day the international company is a CFC.

Strategic influence: Reduces unintended inclusions and improves cross-border planning readability.

Know-how as a strategic enabler

With so many adjustments and uncertainties, Orbitax specialists emphasised the significance of technology-driven state of affairs modeling and compliance automation.

Orbitax’s International Minimal Tax (GMT) and Worldwide Tax Calculator (ITC) platforms provide:

• Customizable calculations to mannequin completely different legislative outcomes.
• Automated updates through a sturdy nation tracker.
• Built-in compliance workflows from provision to submitting.

Andrew Sommerville, Senior Supervisor at Worldwide Tax at Orbitax, famous, “Understanding what has modified is important. However having the ability to take a look at drive the influence forward of 2026 is what’s going to actually enable you to keep forward of the curve.”

What ought to MNEs do now?

Regardless of the G7’s political settlement, the compliance burden stays unchanged. Tax groups should:

• Proceed getting ready for Pillar 2 obligations.
• Monitor jurisdictional updates and legislative adjustments.
• Leverage know-how to automate knowledge assortment, analysis, and submitting.

And not using a strong resolution, the quantity and complexity of latest obligations might be overwhelming.

Thomson Reuters + Orbitax: Future-ready compliance

Thomson Reuters and Orbitax are dedicated to serving to international firms navigate this complexity by way of related, embedded, and clever compliance options. Whether or not you’re modeling the influence of OBBBA or getting ready for Pillar 2, our accomplice ecosystem delivers unmatched experience and automation.

Discover how Thomson Reuters and Orbitax may also help your crew keep forward:

Watch our on-demand webinar, Navigate Evolving Pillar 2 Guidelines: The Orbitax Benefit for US Multinationals,  to learn the way OBBBA and Pillar 2 are reshaping multinational tax technique.

Navigate Evolving Pillar 2 Guidelines: The Orbitax Benefit for US MNEs

Find out how Orbitax may also help handle Pillar 2 compliance and cut back danger publicity.

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