Individual US shareholders of non-US operating businesses received some good news from the US Treasury Department in proposed regulations released on 4 March. These proposed rules, on which taxpayers can rely going forward, confirm they can elect to deduct 50 percent of certain operating company income that is taxed to them on an arising basis under the new global intangible low-taxed income (“GILTI”) rules.

While the international tax provisions of the United States’ 2017 landmark Tax Cuts and Jobs Act were billed as a move to a “participation exemption” system, the GILTI rules act as a back-stop to prevent base erosio...