FDII / FDDEI (US export incentive)
FDII (Foreign-Derived Intangible Income) was a US tax incentive introduced alongside GILTI in 2017. It taxes a US corporation's income from foreign sales tied to US-held intellectual property at below the 21% headline rate, to encourage groups to keep their IP-generating activity in the United States. It is the carrot to GILTI's stick. The 2025 One Big Beautiful Bill Act renamed it Foreign-Derived Deduction Eligible Income (FDDEI) and cut the deduction, so the effective rate for 2026 is about 14%, not the roughly 16.4% that earlier projections assumed. It exists only in US law, with no direct equivalent in the UK, Australia, Canada or India.
ByLoopholeKiln EditorialPublished
Figures current as of·Corrections
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Example: a US group earns royalties from non-US customers for software developed in the US; under FDDEI that income is taxed at about 14% rather than the full 21%.
Why it matters to a small business: FDDEI is irrelevant to non-US businesses, and to US small firms that do not have substantial foreign-derived income from intellectual property.