Net CFC Tested Income (NCTI) [Formerly GILTI]
Net CFC Tested Income (NCTI), previously known as Global Intangible Low-Taxed Income (GILTI), is a provision in United States tax law designed to prevent multinational corporations from shifting their profits to low-tax jurisdictions. GILTI was originally introduced as part of the Tax Cuts and Jobs Act (TCJA) in 2017. In 2025, it was renamed NCTI under the One Big Beautiful Act (OBBB), though the underlying regime continues in modified form.
Under NCTI, U.S. shareholders of certain foreign corporations are required to include in their taxable income their share of the corporation’s net controlled foreign corporations tested income, subject to the applicable statutory calculations and adjustments.
Hone Maxwell LLP attorneys are international tax lawyers who advise clients, such as multinational corporations or U.S. shareholders of foreign corporations, on the complex regulations and compliance requirements associated with NCTI. They provide guidance on structuring their international operations in a tax-efficient manner while ensuring compliance with NCTI provisions.
HMLLP helps clients analyze their foreign operations, determine the amount of NCTI income, assess tax implications and develop strategies to minimize tax liability. We stay apprised of the always-changing tax laws and regulations related to NCTI and provide legal representation and advocacy if disputes or audits arise with federal tax authorities.
HMLLP also works closely with accounting firms and tax preparers to assist in the reporting and calculation of NCTI for their current clients.
Download Our Free Guide
Foreign investors: Learn about options for opening a business and tax compliance in the U.S.
Download Our Free Guide
Why repatriating profits to the U.S. can be more beneficial, provide a clear picture on how nearshoring can facilitate that process and show the benefits to U.S. investment.
NCTI, or Net CFC Tested Income, formerly known as Global Intangible Low-Taxed Income or GILTI, is a U.S. international tax regime that requires certain U.S. shareholders of foreign corporations to report and potentially pay tax on foreign earnings, even if those profits are not distributed.
NCTI generally applies to U.S. shareholders who own interests in Controlled Foreign Corporations (CFCs). The rules often affect business owners, entrepreneurs, and investors with foreign companies.
Yes. One of the primary features of NCTI is that certain foreign earnings may be taxable to U.S. owners even when profits remain in the foreign company and are not distributed.
NCTI calculations involve multiple factors, including ownership percentages, corporate earnings, foreign taxes paid, and certain interest expense and income. Under the new NCTI regime, fixed asset base or Qualified Business Asset Investment (QBAI), is no longer relevant as it was with GILTI. The calculations can be highly complex and often require careful planning.
In some situations, foreign tax credits may help reduce or eliminate NCTI-related tax liability. The availability and effectiveness of credits depend on the structure of the foreign business and the taxes paid abroad.
Potential planning opportunities may include restructuring ownership, modifying entity classifications, evaluating elections, and coordinating international tax strategies. Every situation requires a case-specific analysis.
The NCTI rules are among the most complex areas of international tax law. An international tax attorney can evaluate compliance obligations, identify planning opportunities, and help avoid costly reporting mistakes.