Foreign Tax Credit (FTC) Issues

BACKGROUND

The foreign tax credit alleviates the burden of double taxation on American worldwide companies that, under current U.S. tax laws, are subject to tax on a worldwide basis. The foreign tax credit is subject to numerous limitations and is only creditable on foreign taxes that bear the character of income taxes.

The FY 2013 budget proposal, like the FY 2012 budget proposal, includes changes to the foreign tax credit regime, including modification to the foreign tax credit pooling provisions.

CHAMBER POSITION

The Chamber opposes changes to the foreign tax credit regime. Because of our worldwide system of tax, American worldwide companies face the risk of double taxation. The Chamber believes provisions such as the foreign tax credit mitigate the impact of this double taxation, helping to keep American worldwide companies competitive.

LINKS

• Chamber letter opposing changes to international taxation
• JCT Explanation of FY 2013 Greenbook