Thursday, March 26, 2020

No branch of financial data is too obscure for Calcbench to go full nerd, and today we demonstrate that commitment by returning to the world of tax data for a look at one of the newest tax disclosures out there.

Today we look at Global Intangible Low Tax Income, otherwise known as the GILTI tax.

GILTI was created by the U.S. tax reform law enacted at the end of 2017. It’s supposed to be a tax on certain types of foreign earnings, to dissuade U.S. companies from relocating their corporate headquarters (or other valuable intellectual property) to low-tax jurisdictions overseas.

Basically GILTI sets a minimum tax of 10.5 to 13.125 percent on the average foreign tax rate U.S. companies pay around the world. Spoiler: in the two years since its creation, GILTI hasn’t quite had that “keep your valuable asses here” effect lawmakers desired — but then, unintended consequences are nothing new to the U.S. tax code.

Calcbench isn’t interested in the perverse incentives stuff anyway. We just wanted to know how one can find GILTI tax data, so you can do whatever research is on your mind.

Here’s what we did.

First, GILTI turns up in a company’s tax reconciliation. That’s the breakdown every company provides explaining the difference between what it’s supposed to pay according to statutory corporate tax rates, and what it actually pays after various deductions and credits. So if you want to find GILTI payments, start there.

We used our Interactive Disclosure database, our Segments and Breakouts page, and our Raw XBRL Query tool to search those disclosures for “GILTI.” We found 27 companies that reported a reconciliation item related to GILTI. Table 1, below, shows the firms that reported an actual GILTI amount.



Here comes the tricky part. Firms can reconcile their tax disclosures in several ways. Some reconcile by dollar amount; others reconcile by tax rate. A few even reconcile both ways, which is nice.

But this does mean if you want a holistic look at all GILTI disclosures, you need to do some calculations. For example, Merck & Co. ($MRK) reported a GILTI tax payment of $336 million in 2019. Laboratory Corp. of America ($LH), meanwhile, reported that GILTI payments were 1.1 percent of total tax payments — so if you wanted to calculate the dollar amount, you’d need to look at what Lab Corp paid in taxes and do some math.

Financial analysts have another issue: U.S. Generally Accepted Accounting Principles don’t have a standard tag to apply to GILTI payments. That is, all firms report revenue using the same XBRL tag — and ditto for operating income, inventory, future lease payments, and so forth. You can easily find all companies’ disclosure of those items by searching for that tag.

GILTI has no such standard tag. Instead, each company still uses its own extension tag, and that can vary from one firm to the next. We found “GILTI tax,” “GILTI expense,” “GILTI net of foreign tax credits,” and lots of other examples.

In the fullness of time, GAAP might define a GILTI tag that applies to all companies. Today, analysts must still search disclosures and XBRL tags for “GILTI” or closely related terms.

That’s OK. Calcbench still has the data, and the database functionality to find those numbers — quickly and accurately.


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