One of the hottest issues in the corporate-tax world right now is about when multinational companies can use the taxes they pay in foreign countries to defray their US tax bills.
The Treasury Department has made that process tougher. Last December, it tightened US foreign tax credit rules, narrowing the range of taxes that qualify for it. But many companies have complained that Treasury went too far—rendering some taxes ineligible for the credit even though they’ve been eligible for years, and thus requiring companies to pay taxes twice on the same income. Earlier this month, the chief financial officers of 28 major companies urged Treasury Secretary Janet Yellen to modify the rules.
Treasury has acknowledged the companies’ complaints and says it plans steps to address some of them. But it has defended the basic thrust of the rules. Yellen told a Senate committee this week that “these regulations are very important to protect critical interests of the United States."
On this episode of Talking Tax, we discuss the dispute over the foreign tax credit rules with Rafic Barrage, a partner in the North America Tax Practice Group at Baker & McKenzie LLP in Washington.
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