On January 13, the authors of California Assembly Bill AB 71, a bill introduced to address the state’s homelessness problem, amended the bill’s provisions to propose an increase to the corporate income tax rate and to establish global intangible low-taxed income (GILTI) inclusion rules.
The bill provides that for taxable years starting January 1, 2022, the corporate income tax rate would increase from the current rate of 8.84% to 9.6% for businesses with taxable income over $5 million for the taxable year (and, from current rate of 10.84% to 11.6% for financial institutions).
Next, the bill would require taxpayers who make a water’s-edge election to include in gross income 50% of the GILTI and 40% of the repatriation income of affiliated corporations, but not take into account the apportionment factors of those affiliated corporations. For calendar year 2022 only, the bill would allow a taxpayer to revoke its water’s-edge election.
With respect to the personal income tax, the bill would require inclusion of a taxpayer’s GILTI in gross income for taxable years starting January 1, 2022.
This bill is currently being reviewed by the Assembly Housing and Community Development Committee.