Treasury to Revisit Foreign Tax Credit Changes
The U.S. Treasury is considering possible modifications to heavily criticized changes it made to foreign tax credit rules last year, POLITICO Pro (subscription) reports. While it does so, businesses can rely temporarily on the old rules.
The background: The U.S. tax code has long provided a foreign tax credit, which is intended to prevent double taxation for U.S. businesses that have foreign income subject to both U.S. and foreign income tax.
- The new rules were “finalized last year in response to the rise of digital service taxes in other countries. Businesses say the rules have gone too far.”
What’s going on: When the changes were made final, “the Treasury Department and the IRS received questions regarding the application of the … final regulations and requests to modify those regulations,” reads a notice from the IRS.
- While Treasury revisits the changes, businesses can use the old regulations for taxable years beginning on or after Dec. 28, 2021, and ending on or before Dec. 31, 2023.
- “[A]dditional temporary relief” may also be provided, according to the notice.
Why it’s important: In 2021, when the agency was considering the changes to the foreign tax credit regime, the NAM weighed in, warning that “proposals to limit the foreign tax credit should take into consideration the potential impact on the ability of manufacturers to effectively compete in a global market.”
- When Treasury ultimately released the final regulations, the NAM and a coalition of business groups called on it to withdraw and repropose the regulations, saying the rules would limit significantly the ability of manufacturers to claim the foreign tax credit.
Our take: “The NAM welcomes the decision by Treasury and the IRS to revisit the harmful changes made to the foreign tax credit rules, which tilted the playing field against globally engaged manufacturers,” said NAM Senior Director of Tax Policy David Eiselsberg.
- “Throughout the process, the NAM made it clear that any changes should not hurt the ability of manufacturers to effectively compete in today’s global economy.”
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Manufacturers Unveil Competitiveness Agenda Ahead of Midterm Elections
“Competing to Win” offers a path for bringing the country together around policies, shared values and a unified purpose
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
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The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org
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