H.R.1 updates: GILTI, FDII and BEAT — action for cross‑border foundersH.R.1 更新：GILTI、FDII 和 BEAT — 跨境创始人的应对措施

H.R.1 — the One Big Beautiful Bill Act, enacted July 4, 2025 — makes substantive adjustments to international tax provisions, notably GILTI (renamed NCTI), FDII (renamed FDDEI), and BEAT, effective for tax years beginning after December 31, 2025. Professional services firms are flagging changes that alter effective tax rates on U.S. multinationals, shift the economics of royalty and service arrangements, and change how cross‑border payments are sourced and taxed. For founders and finance leaders structuring across the US‑China‑Hong Kong‑Singapore corridors, the practical question is: what should you change in your entity design and documentation now, and what can safely wait?

What the enacted law means in plain terms

H.R.1 reworks the international minimum tax landscape: GILTI becomes NCTI (Net CFC Tested Income) with the QBAI exclusion repealed and the Section 250 deduction cut to 40% (an effective rate of roughly 12.6–14%); FDII becomes FDDEI at roughly a 14% effective rate; BEAT settles at 10.5%; and foreign tax credits face a 90% haircut. The net effect for many groups: more of your foreign income is pulled into U.S. tax rules; preferential treatment for export‑related income is narrowed; and deductions that create BEAT‑style base erosion risk face a firmer minimum-tax backstop.

Those shifts matter for cross‑border structures because they change where profit should be booked and how intercompany charges are priced. With the QBAI exclusion repealed, tested income under NCTI rises, so passive or low‑tax holding companies commonly used by Singapore and Hong Kong groups face higher U.S. taxable inclusion for U.S. owners. With FDII scaled back into FDDEI, the tax advantage for housing IP offshore while selling into the U.S. market is reduced — which affects where to locate R&D and IP ownership.

Why founders expanding from Asia should pay attention now

Singapore, Hong Kong, and China-outbound founders who are forming U.S. opcos or arranging holding companies need to re-run their economics. Practical impacts include dividend routing, royalty and management fee levels, and withholding tax planning under bilateral treaties. Treaty benefits and domestic elections (e.g., FTC vs. deduction decisions) will influence whether an offshore holding company remains advantageous.

Operationally, this affects several incorporation and compliance mechanics you often overlook: ACRA filings and IRAS incentives if you use a Singapore holding company; IRD guidance considerations for Hong Kong holding companies; MOFCOM/SAFE ODI steps if Chinese entities invest outbound; and U.S. operational items like Delaware franchise tax budgeting and the EIN/ITIN process for key officers. These mechanics aren’t optional — they intersect with tax outcomes and cross‑border mobility of cash and IP.

Concrete next steps for entity design and tax optimization

Model your position under the enacted rules: quantify NCTI inclusions, FTC utilization after the 90% haircut, and BEAT exposure at the 10.5% rate under different transfer pricing strategies, and compare against your pre-2026 baseline. Our partner practice, LYU LLC, supports detailed scenario modeling and sensitivity analysis in this area.

• Revisit holding company jurisdiction: compare Singapore and Hong Kong on treaty access, domestic incentives, and substance expectations. See our cross-border corporate structuring for SG and HK founders guide for structure tradeoffs.
• Reprice intercompany royalties and services: document commercial rationale and contemporaneous transfer pricing studies to defend against BEAT‑style recharacterizations.
• Check ODI and outbound investment approvals for PRC investors: update MOFCOM/SAFE filings where ownership or capital flows will change.
• Model U.S. entity choices: a Delaware C‑Corp remains common for VC and M&A — but confirm Delaware franchise tax effects and U.S. repatriation policy. See our Delaware C-Corp setup for foreign founders guide.
• Update tax provisions in commercial contracts and M&A term sheets: changes to BEAT or GILTI can affect earn-outs and purchase price adjustments. Engage early with advisers offering cross-border M&A advisory support.

Practical jurisdictional mechanics to check now

Singapore: confirm ACRA filings and consider IRAS incentives to create demonstrable substance. Hong Kong: document board oversight and keep minutes to support IRD substance arguments. China: if onshore entities are investing, confirm MOFCOM/SAFE ODI filings before funding moves. U.S.: obtain EINs for entities (you can apply without SSNs using Form SS‑4 procedures), budget for Delaware franchise tax, and consider ITINs for individual founders if they’ll be U.S. taxpayers.

Also coordinate transfer pricing documentation with operational evidence — BEAT and GILTI inquiries increasingly look for economic substance, not just contractual terms. If you haven’t run a post‑deal TP audit in the last 12 months, prioritize that work now.

YZ CPA Advisory View

For Singapore, Hong Kong, and China-outbound founders, the enacted H.R.1 rules are a prompt to make data‑driven restructuring decisions, not panic moves. Start with modeling under current law and documentary fixes: update intercompany agreements, demonstrate substance in SG/HK holding companies, and align M&A documentation to new tax risk profiles. Prioritize actions that are low cost but high evidence value.

If you need modeling or a rework of operating agreements and TP policies, our advisers combine tax strategy with data analytics and financial modeling for cross-border groups to quantify outcomes and support board decisions.

中文摘要

美国 H.R.1 已于 2025 年 7 月 4 日生效，将 GILTI 更名为 NCTI（有效税率约 12.6%–14%）、FDII 更名为 FDDEI（约 14%），并将 BEAT 定为 10.5%，适用于 2025 年 12 月 31 日之后开始的纳税年度，提高了对海外收入的美国税负并改变许可费与服务费用的税务处理。新规则对在新加坡、香港设立控股公司并向美国销售产品或服务的企业影响最大，建议按现行法建模并更新关联交易文件与合规审批。

To discuss how these developments affect your cross-border operations, schedule a consultation with YZ CPA Advisory or explore our international tax planning and US-China treaty optimization service.