“There is bipartisan support to extend these expired provisions including the ‘look-through’ rules for payments between related foreign corporations and the exception from subpart F for active financing income. Majority Leader Reid, Minority Leader McConnell and Senate Finance Committee Chairman Baucus engaged in a colloquy on the Senate floor on March 14, during which they discussed the importance of extending the expired tax provisions. On March 14, the Joint Committee on Taxation released an estimate of the revenue provisions included in the Obama Administration’s Fiscal Year 2013 Budget Proposal, which includes an extension of the expired provision.
“NFTC members believe that pro-growth tax law changes will go a long way to shore up business confidence and promote economic growth and job creation. We urge Congress to adopt a bill that can be enacted as soon as possible and signed into law by the President that includes the provisions that expired at the end of 2011, including the ‘look-through’ rules and subpart F active business financing income.
“We support extension of current law that allows ‘look-through’ treatment for payments of dividends, interest, rents and royalties between related controlled foreign corporations. Without this provision, which expired at the end of 2011, American companies would be subject to immediate U.S. taxation when they redeploy foreign earnings from active business operations in foreign markets. Foreign businesses competing in the same markets pay no such tax to their home countries. Without the extension of this rule, American companies would be at a competitive disadvantage in serving foreign customers and consumers.
“We also support extension of the provision that taxes active financial services income earned abroad by foreign subsidiaries of U.S. companies when the financing income is brought back to the United States. While this provision – also known as an exception from subpart F for active financing income – typically is associated with financial service firms, it also is important to U.S. manufacturers with finance and credit affiliates that provide financing for overseas buyers. The ability to provide competitive financing for customers has a direct and positive impact on U.S. exports and manufacturing jobs. Conversely, without an exception from subpart F, these financing arms, unlike their foreign counterparts, are subject to simultaneous foreign and U.S. taxes on their overseas earnings.”
About the NFTC
Advancing Global Commerce for Nearly A Century- The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
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