Proposed FTC laws would flip credit score requirements the other way up – taxes

Miller & Chevalier Chartered

United States:

Proposed FTC regulations would turn creditworthiness standards upside down

July 28, 2021

Miller & Chevalier Chartered

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Tax information international

In this article, Tax Associate Kevin Kenworthy and Senior Associate Caroline Reaves argue that recently proposed Foreign Tax Credit (FTC) regulations would fundamentally change the 1983 Eligible Foreign Tax Test, and examine the proposed changes to that test and their potential impact. The authors conclude that the “1983 ordinances avoid the need to tackle the intricacies and inaccuracies of the current code by adopting the essential principles of a tax on net income and examining foreign taxes on the basis of their functioning and effect on those principles.” The framework has proven to be permanent and is in line with the remedial aims of the FTC. The requirement for a foreign tax to be more closely aligned with the specifics of the current US tax law creates uncertainty and weakens the effectiveness of the FTC in reducing double taxation. “

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