Form 5471 Is No Longer Just an Information Return: The GILTI Rules Every U.S. Taxpayer Holding Shares in a Foreign Company Must Understand

For many years, many taxpayers and accountants regarded Form 5471 as nothing more than an information return for foreign companies. As long as Form 5471 was attached to the U.S. individual income tax return to disclose the foreign company shareholding, the filing obligation was considered met.

However, since the Tax Cuts and Jobs Act (TCJA) took effect in 2018, U.S. international tax rules have changed significantly. Today, Form 5471 is no longer just an information return; it may involve additional U.S. income tax reporting and calculations, the most important of which is the GILTI (Global Intangible Low-Taxed Income) regime.

How Form 5471 used to be understood

In the past, Form 5471 was used mainly to report:

• Shareholdings in the foreign company
• The foreign company's financial statements
• Related-party transaction information
• Shareholder information
• The company's earnings information

Many people believed that once Form 5471 was filed, no additional U.S. tax issues would arise unless dividends were actually received.

Important changes after 2018

The GILTI regime changed the way the United States taxes foreign companies.

In some cases, a U.S. shareholder who:

• has not received any dividends;
• whose company has not repatriated its earnings to the United States;
• has not actually received any cash income;

may still be required to report, and pay U.S. income tax on, part of the foreign company's profits.

As a result, many shareholders of foreign companies may need to prepare, in addition to Form 5471:

• Form 5471 Schedule I-1
• Form 8992 (GILTI calculation)
• Form 8993 (Section 250 Deduction)
• Foreign tax credit analysis
• Section 962 Election analysis

Changes starting in 2026 (as of September 2026)

Section 70323 of Pub. L. 119-21 (One Big Beautiful Bill Act), enacted in July 2025, amended Section 951A of the Internal Revenue Code:

• Tax years 2025 and earlier: the GILTI rules described in this article still apply.
• For tax years beginning on or after January 1, 2026: GILTI is renamed "Net CFC Tested Income" (NCTI).
• The deduction for "net deemed tangible income return," which was calculated from the foreign company's tangible assets (QBAI), has been eliminated, so a foreign company with substantial plant and equipment may have more income included in the calculation.
• At the same time, the Section 250 deduction percentage changes from 50% to 40%, and the percentage of deemed-paid foreign taxes creditable under Section 960(d) increases from 80% to 90% (these two changes apply mainly to U.S. corporate shareholders and to individual shareholders who make a Section 962 Election).

References to GILTI in the rest of this article should be read as NCTI for tax years 2026 and later.

Does owning more than 10% always mean GILTI?

Not necessarily.

This is one of the most common misunderstandings today.

Owning 10% or more of a foreign company's stock may make you a U.S. Shareholder as defined in U.S. tax law, but that does not mean you necessarily have to report GILTI.

First, you must determine whether the foreign company is a:

CFC (Controlled Foreign Corporation)

In general, a company can be treated as a CFC only when all of its U.S. Shareholders together own more than 50% of its stock.

If the company is not a CFC, GILTI reporting generally does not arise.

Is GILTI still owed if the foreign company has a loss?

Not necessarily.

Many people mistakenly believe that every CFC has GILTI.

In fact, if the company has:

• Operating losses
• A Tested Loss
• Limited business activity

the GILTI calculation may come out to zero.

Even so, we recommend keeping the related analysis workpapers to show that the necessary evaluation was completed.

What we often see

In recent years, more and more new immigrants have come to the United States from places such as:

• Mainland China
• Hong Kong
• Taiwan
• Singapore
• Malaysia

Many of these taxpayers are in the following situation:

• They have filed Form 5471 for many years;
• They have disclosed their foreign company shareholding information;
• They have never performed a GILTI analysis;
• They have never prepared Form 8992;
• They simply carry forward the prior year's filing approach each year.

As international tax law grows more complex, taxpayers should periodically review their filing obligations related to foreign companies.

What taxpayers should watch for

If you hold shares in a foreign company, we recommend periodically checking:

• Your personal ownership percentage;
• The combined ownership percentage of all U.S. Shareholders;
• Whether the company is a CFC;
• Whether GILTI must be reported;
• Whether the foreign tax credit is available;
• Whether a Section 962 Election is appropriate.

Conclusion

Form 5471 is no longer simply an information return.

For many U.S. taxpayers holding shares in foreign companies, there are now additional considerations:

• CFC determination
• GILTI calculation
• Foreign tax credit
• Section 962 Election
• Other U.S. international tax rules

In recent years, as more and more Chinese immigrants in the United States hold foreign businesses, these filing requirements have become increasingly important. We recommend that taxpayers periodically review their international tax filing obligations to avoid unnecessary tax risk and penalties in the future.

Kit Leung CPA Certified Public Accountant (U.S.)

Disclaimer: This article is for general information only and does not constitute tax, legal, or other professional advice. Please consult a professional tax advisor about your specific situation.