Enacted as part of the Tax Cuts and Jobs Act of 2017, Foreign-Derived Intangible Income (FDII) is an export tax incentive available to domestic C-corporations which allows for a permanent deduction on taxable income up to 37.5%.
To qualify, a domestic C-corporation should have the following types of foreign-derived income earned from its unrelated or related party customers:
- Sale of property to a foreign customer for foreign use or consumption; or
- Services provided to a foreign customer or with respect to any property outside of the United States.
The FDII deduction is calculated from the excess of export sales and services income above a 10% rate of return on the corporation’s tangible depreciable assets. Additionally, the deduction is available to those corporations with positive taxable income after applying available net operating losses.

Vince Houk
Partner-in-Charge, International Tax Services
Vince Houk, CPA, has more than 18 years of tax experience, including more than 12 years serving multinational…

Craig Epstein
Partner, International Tax Services
Craig Epstein, CPA, has more than 12 years in public accounting, including Big Four firm experience. He has…