ABA, Trade Groups Call for Withdrawal of Foreign Tax Credit Regulations

The American Bankers Association joined with a broad-based group of trade associations in a letter expressing strong concerns on final foreign tax credit regulations that were issued by the U.S. Treasury Department and the Internal Revenue Service in January. The groups urged the Treasury to withdraw and re-propose portions of the final regulations.

The groups’ letter raised concerns regarding new and restrictive provisions that will minimize or eliminate the ability of U.S. corporations from taking foreign tax credits. Specifically, rules regarding attribution of services and royalty income, arm’s length standards, cost recovery and allocations of income have been reviewed by taxpayers and believed to be problematic, they noted, adding that the new rules could result in double taxation and a decrease in the competitiveness of U.S. companies.