Indeed, discouraging U.S. companies from reducing foreign taxes can cost the U.S. government money.
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If you have any allocation to foreign companies in your portfolio, you probably paid foreign taxes as well.
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It also tells us about the various deductions that people are using, for foreign taxes paid and so on.
The proposed legislation would still allow citizens and resident aliens abroad to continue deducting from their U.S. taxes dollar-for-dollar any foreign taxes paid.
Expatriates can reduce or wipe out their regular U.S. income tax bills by claiming a credit for the foreign taxes they must pay.
If a taxpayer does not meet this exhaustion requirement, the IRS will consider the foreign taxes to have been voluntarily paid and deny a credit.
If all foreign taxes were creditable, a U.S. company might be indifferent to the amount of foreign taxes it pays because a credit offsets federal taxes dollar-for-dollar.
The U.S. government generally gives companies operating in foreign countries a tax credit to offset the foreign taxes paid, so the companies are not taxed twice on the same foreign income.
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This would result in double taxation of foreign earnings that are also taxed by a foreign country, but foreign taxes generally can be claimed as a credit against U.S. taxes on foreign earnings.
Every dollar a company pays to a foreign government will ultimately cost the U.S. treasury a dollar because the U.S. must provide a dollar-for-dollar credit for foreign taxes paid on foreign income, under both the U.S. tax code and bilateral U.S. treaties with most of our major trade and investment partners.
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The provision applies specifically to foreign income taxes and not to royalties as you incorrectly stated.
But to avoid double taxation it also allows those corporations to write off most forms of foreign income taxes.
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U.S. tax law treats royalty costs as mere deductions, while foreign income taxes count as dollar-for-dollar credits against U.S. income tax.
China and Russia were meanwhile imposing price controls, while Argentina and Vietnam were enforcing foreign sales taxes or export bans, she said.
In short, no company based in the United States could compete if it had to pay both American and foreign income taxes on the same project.
Washington forces American companies with facilities in foreign countries to pay taxes to Uncle Sam, in addition to the taxes they pay the foreign countries in which these facilities are located.
The country's Free Trade Zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors.
It's possible the Caymans was chosen to help Citi's foreign executives avoid taxes in their home countries.
Last year, investors were wondering what the magic number was for the real before Mantega slapped foreign investors with taxes in an effort to curb portfolio investments.
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Should Americans enlist in the armed forces, join the foreign service, pay more taxes, do volunteer work, study foreign languages, travel to Muslim countries?
For this reason, the U.S. tax rules governing the dollar-for-dollar foreign tax credit require a U.S. company to exhaust all effective remedies to reduce its taxes under foreign law, or else the credit will be denied in other words, U.S. law expects a U.S. company to take responsible measures to reduce its foreign tax liability, because this has long been understood to be in the national interest.
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Mantega said recently that they were not considering more taxes on foreign investments in fixed income.
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Soon after, the environmental protection minister announced new taxes on foreign oil companies.
The practical difference is small, since companies already shield most of their foreign profits from American taxes.
He was the only one to demonstrate a depth of knowledge on every issue from taxes to foreign policy.
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The latter are defined by hawkish views on taxes and foreign policy.
As Wisconsin Republican Ron Johnson pointed out on Tuesday, Americans are better off when U.S. companies pay less in taxes to foreign governments.
For years, many Americans have used the bank secrecy laws of countries such as Switzerland or Liechtenstein to avoid paying taxes on foreign investments.
Countries like Brazil could conceivably raise taxes on foreign investors buying local currency bonds to ward off dollar flow and sharp appreciation of the Brazilian real.
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Mantega has said recently that if they did not increase taxes on foreign bond investors, along with other measures, the dollar would be around BRL1.40 today.
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