Two Cheers for the Foreign Tax Credit, Even in the BEPS Era

Abstract

Reform of the U.S. international income taxation system has been a hotly debated topic for many years. The principal competing alternatives are a territorial or exemption system and a worldwide system. For reasons summarized in this Article, we favor worldwide taxation if it is real worldwide taxation; that is, a nondeferred U.S. tax is imposed on all foreign income of U.S. residents at the time the income is earned. However, this approach is not acceptable unless the resulting double taxation is alleviated. The longstanding U.S. approach for handling the international double taxation problem is a foreign tax credit limited to the U.S. levy on the taxpayer's foreign income. Indeed, the foreign tax credit is an essential element of the case for worldwide taxation. Moreover, territorial systems often apply worldwide taxation with a *

Base Erosion and Profit Shifting (Beps) in Low-Income Nations by the Multinationals: A Critical Review of Literature

“…Also, these tax havens may also offer secrecy provisions (in areas of banking secrecy, non-exchange of tax information with other tax jurisdictions, hidden beneficial ownership, etc. ), and have therefore enabled BEPS practices to thrive, by allowing the taxpayer to remain hidden from tax authorities elsewhere ( The low to nil tax rates and shrouded secrecy -combine to increase the capacity of tax havens to attract foreign capital, which is much easier to move between countries as a result of the intensity of globalization and financial de-regulation (Fleming, Peroni, & Shay, 2016…”