Pillar 8
Tax glossary
The glossary route family is live with structured term definitions, examples, related-term links, and translation fields that can expand into multilingual terminology pages.
Seed terms
120
Target scale
3,000+
Additional Medicare Tax
A 0.9 percent additional Medicare tax on wages and self-employment income above income thresholds.
Additional Rate (UK)
The top UK income tax rate (45 percent) applying to taxable income above 125,140 GBP.
Adjusted Gross Income (AGI)
Gross income reduced by specific above-the-line adjustments such as IRA deductions, student-loan interest, and self-employment tax.
Advance Pricing Agreement (APA)
Agreement between taxpayer and tax authority on transfer pricing for future years.
Affiliated Group
A parent corporation and 80-percent-owned subsidiaries eligible to file a consolidated return.
Alternative Minimum Tax (AMT)
A parallel tax computed to ensure high-income taxpayers pay a minimum amount of federal tax.
American Opportunity Tax Credit
A partially refundable education credit of up to $2,500 per eligible student for the first four years of post-secondary education.
Annual Exempt Amount (UK CGT)
UK annual capital gains tax-free allowance.
Arm's Length Principle
The standard requiring related-party transactions to be priced as between unrelated parties.
Base Erosion Anti-Abuse Tax (BEAT)
A minimum tax aimed at preventing erosion of the U.S. tax base via deductible payments to foreign affiliates.
Basic Rate Band (UK)
The portion of UK taxable income taxed at the basic rate of 20 percent on non-savings income.
Basis
The taxpayer's investment in property for tax purposes used to compute gain, loss, and depreciation.
Beneficial Owner
The person or entity that actually enjoys the benefit of the income and is not merely holding it for someone else.
BEPS (Base Erosion and Profit Shifting)
OECD project addressing tax avoidance strategies that exploit gaps in international tax rules.
Branch Profits Tax
A 30 percent additional tax on foreign corporations' U.S. branches' effectively connected earnings.
Built-In Gain (BIG) Tax
Corporate-level tax on net recognized built-in gains of a former C corporation that became an S corporation.
Business Asset Disposal Relief
Reduced UK CGT rate on disposals of qualifying business assets.
C Corporation
A corporation taxed separately from its owners under Subchapter C of the Internal Revenue Code.
Capital Gains Tax (UK)
UK tax on gains from disposal of assets above the annual exempt amount.
Casualty Loss Deduction
Deduction for personal-use property losses from sudden and unusual events.
Certificate of Overseas Residence
A residence certificate used to support certain treaty-relief claims on cross-border income.
Charitable Contribution Deduction
An itemized deduction for contributions to qualifying charitable organizations.
Check-the-Box Election
Election on Form 8832 to choose federal tax classification of an eligible entity.
Child Tax Credit (CTC)
A partially refundable credit for taxpayers with qualifying children under age 17.
Common Reporting Standard (CRS)
OECD framework for automatic exchange of financial account information among participating jurisdictions.
Competent Authority
The designated tax authority official empowered to resolve treaty disputes.
Consolidated Return
Single federal income tax return filed by an affiliated group of corporations.
Controlled Foreign Corporation (CFC)
A foreign corporation more than 50 percent owned by U.S. shareholders that triggers Subpart F and GILTI rules.
Controlled Group
Aggregated group of related corporations treated as a single employer or single corporation for certain tax purposes.
Corporation Tax (UK)
UK tax on profits of companies, currently 25 percent main rate and 19 percent small profits rate.
Country-by-Country Reporting (CbCR)
BEPS Action 13 reporting framework requiring large multinational enterprises to report key metrics per jurisdiction.
Dependent
A qualifying child or qualifying relative claimed on the taxpayer's return.
Disregarded Entity
An entity treated as not separate from its owner for certain federal income tax purposes.
Earned Income Tax Credit (EITC)
A refundable tax credit for low-to-moderate-income working individuals and families.
Effective Tax Rate
Total tax divided by total income, representing the average rate of tax paid.
Effectively Connected Income (ECI)
Income that is effectively connected with a foreign person's U.S. trade or business and generally taxed on a net basis in the United States.
FATCA (Foreign Account Tax Compliance Act)
Statutory regime requiring foreign financial institutions to report U.S.-owned accounts to IRS.
FBAR (FinCEN Form 114)
Report of Foreign Bank and Financial Accounts filed with FinCEN, separate from the tax return.
FICA
Federal Insurance Contributions Act tax funding Social Security and Medicare.
FIFO (First-In, First-Out)
Inventory cost-flow method assuming the earliest acquired items are sold first.
Foreign Tax Credit (FTC)
Credit against U.S. tax for foreign income taxes paid, subject to limitations.
Foreign Tax Credit Limitation
The cap on FTC based on U.S. tax on foreign-source income in each Section 904(d) basket.
Foreign-Derived Intangible Income (FDII)
A favorable deduction regime for U.S. corporate income from foreign sales of property and services.
Foreign-Owned U.S. Disregarded Entity
A U.S. disregarded entity owned directly or indirectly by a foreign person and subject to special reporting rules.
Form 8938 (FATCA Individual Filing)
Tax-return form for reporting specified foreign financial assets above filing thresholds.
Generation-Skipping Transfer (GST) Tax
Federal tax on transfers that skip a generation, currently at the same 40 percent rate as estate tax.
Global Intangible Low-Taxed Income (GILTI)
A current inclusion regime for U.S. shareholders on the excess CFC earnings above a routine return on QBAI.
GloBE Rules
The Global anti-Base Erosion rules implementing Pillar Two minimum tax.
Gross Income
All income from whatever source derived unless a specific rule excludes it.
Head of Household
A filing status for unmarried taxpayers who maintain a home for a qualifying person.
Higher Rate Band (UK)
The portion of UK taxable income above the basic rate band, taxed at 40 percent (33.75 percent on dividends).
Hobby Loss
Loss from an activity not engaged in for profit, generally not deductible against other income.
Income Inclusion Rule (IIR)
Pillar Two top-down rule charging top-up tax at the ultimate parent on low-taxed profits of subsidiaries.
Inside Basis
A partnership's basis in its assets, allocated among partners for depreciation and gain/loss purposes.
IR35 / Off-Payroll Working
UK rules treating disguised employment via intermediaries as employment for tax purposes.
Itemized Deduction
Deductions listed individually on Schedule A in lieu of the standard deduction.
Kiddie Tax
Tax on a child's unearned income above a threshold at the parent's marginal rate.
Lifetime Gift Tax Exclusion
Cumulative lifetime gift-tax exemption coordinated with the estate tax exclusion.
Lifetime Learning Credit
A nonrefundable education credit equal to 20 percent of up to $10,000 of qualified education expenses.
LIFO (Last-In, First-Out)
Inventory cost-flow method assuming the most recently acquired items are sold first.
Limitation on Benefits (LOB)
A treaty provision restricting treaty benefits to residents meeting objective qualification tests.
LLC Classification
Federal tax classification of LLCs as disregarded entity, partnership, or corporation.
Marginal Tax Rate
The tax rate applied to the next dollar of taxable income.
Mark-to-Market PFIC Election
Election under Section 1296 to use mark-to-market accounting for marketable PFIC stock.
Marketplace Facilitator
A platform operator treated by law as the retailer or seller for certain sales-tax collection purposes on marketplace sales.
Married Filing Jointly (MFJ)
Filing status for married couples who file one tax return reporting both spouses' income.
Married Filing Separately (MFS)
Filing status for married individuals who file individual returns.
Medical Expense Deduction
An itemized deduction for unreimbursed medical and dental expenses above 7.5 percent of AGI.
Medicare Tax
1.45 percent payroll tax on all wages, with an additional 0.9 percent on wages above thresholds.
Mortgage Interest Deduction
An itemized deduction for interest on qualifying acquisition indebtedness on a primary or secondary residence.
Multilateral Instrument (MLI)
OECD instrument amending existing bilateral tax treaties to implement BEPS-related minimum standards.
Mutual Agreement Procedure (MAP)
Treaty mechanism for resolving cross-border tax disputes between competent authorities.
Net Investment Income Tax (NIIT)
A 3.8 percent additional tax on investment income for higher-income taxpayers.
No Tax Due Threshold
The Texas revenue threshold below which an entity may avoid franchise-tax liability while still having filing obligations.
OECD Model Tax Convention
The OECD model used as the starting point for most modern bilateral tax treaties.
Off-Payroll Working Rules
UK rules placing responsibility on the engaging client to determine employment status of contractors.
Ordinary and Necessary Expense
A business expense standard used in Section 162 for trade-or-business deductions.
Outside Basis
A partner's basis in the partnership interest, distinct from the partnership's basis in its assets.
Partnership
A business entity with two or more partners, taxed under Subchapter K with pass-through treatment.
Passive Activity Loss (PAL)
A loss from a passive activity that may only offset passive income.
Passive Foreign Investment Company (PFIC)
A foreign corporation primarily holding passive assets or generating passive income.
Permanent Establishment (PE)
A treaty concept used to decide when a business presence in another country is substantial enough to permit source-country business taxation.
Personal Allowance (UK)
The tax-free amount of UK income tax personal allowance.
Pillar One (OECD BEPS 2.0)
Reallocation of taxing rights to market jurisdictions for the largest multinationals.
Pillar Two (Global Minimum Tax)
OECD framework imposing a 15 percent minimum effective tax on large multinationals.
Premium Tax Credit
A refundable credit for taxpayers with marketplace health coverage premiums.
Pro Forma Form 1120
A mostly blank Form 1120 shell used by certain foreign-owned disregarded entities to attach Form 5472.
QEF Election (Qualified Electing Fund)
An election under Section 1295 to include PFIC earnings currently and avoid Section 1291 punitive treatment.
Qualified Business Income (QBI) Deduction
A deduction of up to 20 percent of qualified business income from pass-through entities.
Qualified Domestic Minimum Top-up Tax (QDMTT)
A jurisdiction's own implementation of the Pillar Two minimum tax to capture top-up tax at home.
Qualified Small Business Stock (QSBS)
Section 1202-qualifying C-corp stock potentially eligible for capital gains exclusion.
Qualifying Child
A dependent meeting the relationship, age, residency, support, and joint-return tests of Section 152(c).
Qualifying Relative
A dependent meeting the relationship or member-of-household, gross income, and support tests of Section 152(d).
Qualifying Surviving Spouse
Filing status available for two years after a spouse's death if the surviving spouse maintains a home for a dependent child.
Reasonable Compensation
The amount of salary an S-corp or closely held corporation owner-employee must receive for services rendered.
Reportable Transaction
For Form 5472 purposes, a related-party transaction that must be reported under the governing rules.
S Corporation
A pass-through corporation elected under Subchapter S that flows income through to shareholders.
Saver's Credit (Retirement Savings Contributions Credit)
A nonrefundable credit for lower-income workers who contribute to retirement accounts.
Section 1202 Stock
Stock potentially qualifying for the QSBS gain exclusion under Section 1202.
Section 754 Election
A partnership election to adjust the basis of partnership property on transfers of interests and distributions.
Section 83(b) Election
Election to include unvested compensatory property in income at grant rather than at vesting.
Self Assessment
HMRC's system that places responsibility on the taxpayer to file the information needed to calculate the tax charge.
Self-Employment Tax
Social Security and Medicare tax on net earnings from self-employment.
Social Security Wage Base
The annual maximum wages subject to Social Security tax.
Standard Deduction
A flat dollar amount that taxpayers can subtract from AGI without itemizing.
State and Local Tax (SALT) Deduction
An itemized deduction for state and local taxes, capped at $10,000 through 2025.
Subpart F Income
Categories of CFC income (e.g., foreign personal holding company income) currently includible by U.S. shareholders.
Substance-Based Income Exclusion (SBIE)
Pillar Two carve-out reducing GloBE base by payroll and tangible-asset substance.
Tax Treaty
A bilateral agreement that allocates taxing rights and addresses double taxation between two countries.
Taxable Income
Adjusted gross income reduced by the standard deduction or itemized deductions and the qualified-business-income deduction.
Transfer Pricing
Pricing of transactions between related parties under arm's-length principle.
Transition Tax (Section 965)
TCJA one-time tax on previously deferred foreign earnings of U.S. shareholders of certain foreign corporations.
Treaty Shopping
Use of treaty network to obtain benefits not intended for the underlying owner.
Turnover
A revenue measure used in many non-U.S. systems to determine registration or tax-regime entry.
U.S. Estate Tax
Federal tax on the transfer of property at death above the applicable exclusion.
UN Model Tax Convention
The UN model often used by developing countries to favor source-state taxation.
Undertaxed Profits Rule (UTPR)
Pillar Two backstop rule allocating top-up tax to other jurisdictions when the IIR does not apply.
Value-Added Tax (VAT)
A transaction tax charged on taxable supplies in systems that use a value-added tax model.
Withholding Agent
The payer or other responsible party that must withhold and remit tax when the rules require it.
Withholding Tax
Tax collected at source by the payer or other responsible party on certain payments.
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.