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International changes in HR 1 prompt Vermont committee to weigh sales-factor enforcement and GILTI/FDDEI effects
Summary
Testimony explained how federal international provisions — the foreign-derived deduction and the renamed GILTI (net CFC-tested income) — interact poorly with state sales-factor apportionment and could increase reported inclusions unless states adopt a sales-factor approach or decouple.
Carl Davis walked the committee through how international provisions in the federal code — including the foreign-derived deduction (FDDEI, pronounced by some as "FIDAY") and the successor to GILTI (now described as net CFC-tested income or NCTI) — interact with Vermont’s corporate tax system.
Davis explained that most states, including Vermont, use sales-factor formulary apportionment to tax a company's in-state share of profit based on where its customers are…
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