 |
WTO CASE FILE: foreign sales corporations
Monday, November 22, 1999
By MICHAEL PAULSON
At stake: A provision of U.S. law that allows multinational companies, including The Boeing Co. and Microsoft Corp., an estimated $2.5 billion exemption from U.S. income taxes for income earned outside the United States.
Background: The U.S. tax code allows a tax exemption for exports generated by a what is known as a foreign sales corporation, a subsidiary of a U.S. corporation that is established offshore to handle foreign sales. An estimated 3,600 companies, including Boeing, Microsoft and General Motors, have set up such subsidiaries in tax havens such as the U.S. Virgin Islands. This type of U.S. tax policy has been a sore subject for some time; a previous U.S. tax provision on the same subject was found to be an illegal export subsidy by a previous international trade body, the General Agreement on Tariffs and Trade.
How the WTO got involved: The European Communities in 1997 challenged the U.S. Foreign Sales Corporation law as an illegal export subsidy that gives U.S. exporters an unfair competitive advantage.
What the WTO said: The WTO ruled that the U.S. tax exemption was really a prohibited form of export subsidy.
The result: None yet. The WTO wants the U.S. Congress to rewrite the tax code. The U.S. government is appealing the case.
How the United States sees it: The United States claims that the WTO made "multiple legal errors" in issuing its decision.
How the European Union sees it: A major victory that balances out European losses in disputes with the United States over bananas and beef.
Postscript: The United States has appealed the ruling by the WTO dispute resolution panel to the WTO's appellate body. A ruling is expected early next year.
SEATTLE POST-INTELLIGENCER
WASHINGTON CORRESPONDENT
· All those hours teens spend on Web aren't wasted
· California court to review Prop 8
· Europe's treasures go online
· Insurers seek mandate in health care overhaul
· Security pact debate halted
· White House rushes to weaken species protection
· Scientists map DNA of mammoth
· Syrian site could have been a reactor, IAEA says
· Daschle picked as health secretary
· Al-Qaida takes aim at Obama's race, character
· A White House tinted green -- and full of Obama energy
more
101 Elliott Ave. W.
Seattle, WA 98119
(206) 448-8000
Home Delivery: (206) 464-2121 or (800) 542-0820
seattlepi.com serves about 1.7 million unique visitors
and 30 million page views each month.
Send comments to newmedia@seattlepi.com
Send investigative tips to iteam@seattlepi.com
©1996-2008 Seattle Post-Intelligencer
Terms of Use/Privacy Policy
