Is there a penalty for filing Form 8991 late?
The schedule belongs to the corporation's return, so the first thing to pin down is whether the return was late or whether a return filed on time went in without the computation. Those are different problems. A return filed without it carries no minimum tax figure at all, so any liability the computation would have produced is unpaid and running, and interest on unpaid tax runs whether or not anybody has quantified it yet. We do not quote a penalty figure without reading the rules for the year concerned, because the exposure depends on which of the two happened and on whether tax was owing.
We filed our US return without Form 8991, so what now?
Compute it before deciding anything else. Until the computation exists, nobody knows whether the omission cost tax, and the two cases are handled differently. The work usually sits in characterising the intercompany payments rather than in the arithmetic: a year of service fees, royalties and interest has to be identified from ledgers and invoices that were not written with this measure in mind. Once there is a figure, a corrected filing carries it. Where the group has several open years, we compute them all before filing any of them, because the earlier years affect the later ones.
Can the result change if we adjust our transfer pricing later?
It can, and in a direction that surprises people. Lowering an intercompany charge to settle a pricing question reduces the deductible payment to the affiliate, which moves the minimum tax measure as well as taxable income. Raising the charge does the reverse. So a pricing adjustment agreed for one purpose reopens the computation for the same year. Where we are clearing up late filings, we settle the pricing position first and compute afterwards, so the group is not filing a figure it already knows will have to be amended.
How many years back do we need to compute this?
Far enough back to cover every year still open, and every year whose figures feed one that is open. The second half catches people out: amounts that carry forward mean a year you thought was closed can still drive a current computation, so it has to be worked out even where nothing will be filed for it. We start by listing the years and what connects them, then compute forward in order. Working backwards from the current year tends to produce a figure that has to be redone once an earlier year is understood.
Will a late US filing change the foreign tax credit we claim in Canada?
If the computation changes the United States tax actually payable, then the amount available as a credit against Canadian tax on the same income changes with it, and the Canadian return that claimed the old figure no longer matches. That is a second filing to correct, on its own timetable. We work the United States side to a final figure first for exactly this reason: claiming a credit for a liability that is still moving means amending the Canadian return twice. Where several years are open, the sequence matters more than the speed.
Does an omitted computation affect our current year planning?
Yes, and this is the part that costs money quietly. Decisions about how the United States company is funded, and what it is charged for by affiliates, depend on knowing what the measure does to the deduction. A group with an uncomputed prior year is making those decisions without knowing whether its existing charges produce a liability. We compute the open years first and then set the funding and charging basis for the current one, so the group is not repeating an arrangement it has never actually priced.
Is GILTI computed at the CFC level or the shareholder level?
Both, in sequence. Tested income, tested loss and the qualifying asset base are measured company by company. They are then aggregated at the US shareholder, which is where the netting of losses across companies happens and where the inclusion, the deduction and the credit are determined. That order matters in practice: a loss in one foreign subsidiary can reduce the inclusion caused by another, but only for a shareholder who owns both. See the GILTI inclusion and Form 8992.
Do I pay tax twice on a foreign dividend?
Not at full rates if the relief is claimed. The paying country usually withholds at source, capped by treaty where one applies and the paperwork is in place; your residence country then taxes the dividend and credits the foreign withholding against its own charge. Where the withholding exceeded the treaty rate because no declaration was filed, the excess is recovered from the paying country, not credited at home. See the dividends article.
