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U.S. Tax Reform Hits Trade: OBBBA Explained

New U.S. tax law reshapes customs, compliance, and trade – what you must know now


The One Big Beautiful Bill Act (OBBBA), signed into U.S. law on 4 July 2025, is a sweeping tax reform with major implications not just for accountants, but for customs professionals, compliance officers, importers, and exporters dealing with U.S. trade. While much of the media focused on domestic tax relief, what hasn’t been widely discussed is how this new law affects international tax rules, U.S. import/export operations, and key provisions like Controlled Foreign Corporation (CFC) rules, Base Erosion and Anti-Abuse Tax (BEAT), Global Intangible Low-Taxed Income (GILTI)—now renamed Net CFC Tested Income (NCTI)—and Foreign-Derived Intangible Income (FDII)—now Foreign-Derived Deduction-Eligible Income (FDDEI).


If you work in EU, UK, or U.S. customs, are involved in trade compliance operations, or advise clients on import regulations, this new U.S. law matters to you. Let’s break it down.


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At Customs Manager Ltd., we empower customs and trade professionals in the EU, UK, and USA with expert guidance, training, and news. Our Trade Intelligence Service at www.customsmanager.info keeps you ahead on customs, export controls, and sanctions—all in one place.


Key Questions Covered in This Blog

  • What is the OBBBA and why does it matter to customs professionals?

  • How does the OBBBA change international tax and compliance for U.S. importers/exporters?

  • What are the implications for GILTI (now NCTI), FDII (now FDDEI), and BEAT?

  • How do these changes affect foreign parented groups and U.S. subsidiaries?

  • What should EU and UK customs consultants know to advise clients trading with the U.S.?


Abbreviations Used In This Blog

Abbreviation

Meaning

OBBBA

One Big Beautiful Bill Act

CFC

Controlled Foreign Corporation – a foreign company controlled (over 50%) by U.S. shareholders

GILTI

Global Intangible Low-Taxed Income – now replaced by NCTI

NCTI

Net CFC Tested Income – new version of GILTI, taxing foreign earnings of CFCs

FDII

Foreign-Derived Intangible Income – now replaced by FDDEI

FDDEI

Foreign-Derived Deduction-Eligible Income – new regime incentivising exports of services/goods

BEAT

Base Erosion and Anti-Abuse Tax – U.S. tax targeting large multinationals shifting profits overseas

QBAI

Qualified Business Asset Investment – tangible assets used to reduce GILTI/NCTI liability

QOZ/QOF

Qualified Opportunity Zones/Funds – U.S. tax incentive zones for investment

SALT

State and Local Tax (U.S. deductible caps, e.g., income/property tax)

"Global tax reform is no longer just a finance issue—it’s a trade and customs compliance challenge. And OBBBA just rewrote the playbook."— Arne Mielken, Managing Director, Customs Manager


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What is the OBBBA and why does it matter to customs professionals?

The One Big Beautiful Bill Act (OBBBA) is the most comprehensive U.S. tax overhaul since the Tax Cuts and Jobs Act (TCJA) of 2017. But it’s not just tax professionals who need to pay attention. The Act rewrites the rules on Controlled Foreign Corporations (CFCs)—foreign companies controlled by U.S. shareholders—along with how foreign income is taxed and how deductions apply.

For customs and compliance officers, this means that structures previously used to defer or avoid U.S. tax could now trigger higher tax exposure, stricter customs scrutiny, or new reporting obligations.


How does the OBBBA change international tax and compliance for U.S. importers/exporters?

If you own or deal with foreign subsidiaries, OBBBA’s renaming of GILTI to NCTI signals more than just a rebrand. Under the new Net CFC Tested Income (NCTI) regime, companies can no longer exclude returns on tangible assets (QBAI). That was previously used by U.S. companies to shield offshore factory income from GILTI tax.

This directly affects customs-relevant companies like manufacturers, supply chain hubs, and logistics operators with production outside the U.S.


What are the implications for GILTI (now NCTI), FDII (now FDDEI), and BEAT?

  • GILTI/NCTI: U.S. multinationals must include foreign earnings of CFCs in taxable income, even if reinvested abroad. Eliminating QBAI means you can no longer reduce that income based on fixed assets like factories or warehouses.

  • FDII/FDDEI: The Foreign-Derived Deduction-Eligible Income (FDDEI) regime encourages exports of U.S. goods/services by allowing deductions, but with stricter rules. Notably, gains from selling intellectual property (IP) no longer qualify, affecting licensing and royalty-based exporters.

  • BEAT: This anti-tax-avoidance measure, which penalizes deductions paid to foreign affiliates, was due to rise to 12.5%. Under OBBBA, it’s capped at 10.5%, easing pressure on cross-border service importers and related-party goods transactions.


How do these changes affect foreign parented groups and U.S. subsidiaries?

Many EU and UK companies operating U.S. subsidiaries were affected by TCJA’s downward attribution rules, which caused U.S. entities to be treated as owning foreign CFCs simply because their foreign parent owned another affiliate.

Good news: OBBBA restores Section 958(b)(4), so downward attribution is no longer automatic.

Bad news: The new Section 951B introduces the concept of a Foreign Controlled U.S. Shareholder (FUSSH). If your U.S. subsidiary controls a foreign affiliate, you may still face CFC-level taxation or Subpart F income inclusion (another anti-deferral tax rule).


What should EU and UK customs consultants know to advise clients trading with the U.S.?

  1. Inventory sourcing is affected: If a U.S. company sells goods made in the U.S. through a foreign branch, only 50% of the income is considered foreign source. This affects:

    • Transfer pricing models

    • Tax credit calculations

    • Customs valuation if those goods re-enter the U.S.

  2. CFC ownership thresholds matter more: New rules allow taxation even if a shareholder only held shares part of the year—meaning mid-year acquisitions may cause retroactive tax and customs risks.

  3. Qualified Opportunity Zones (QOZ) are now permanent. These zones give capital gains tax breaks for long-term investment in designated areas. They’re a strategic opportunity for logistics bases, distribution centers, or bonded warehouse locations.


Arne’s Takeaway

OBBBA is not just about U.S. domestic taxes. It alters how foreign income is taxed, when it is taxed, and how cross-border structures are treated. Customs and trade compliance professionals must now rethink:

  • Valuation models

  • Structuring advice

  • Transfer pricing documentation

  • Risk exposure under Subpart F and BEAT


Expert Recommendations

  1. Audit CFC exposure: Review ownership structures and control chains—especially in joint ventures and partnerships.

  2. Flag customs risks in IP or intangible-based income flows.

  3. Collaborate cross-functionally: Legal, tax, customs, and finance must align.

  4. Advise clients on QOZ/FUSSH planning.

  5. Prepare for audits: Mid-year ownership changes or foreign branch flows are audit triggers under the new regime.


Sources & Further Information

Disclaimer

This blog is for educational purposes only and does not constitute legal advice. Please consult your tax, legal, and customs advisors before taking action based on this summary.


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