International Tax

The Creditability of Foreign Taxes — General Issues (Portfolio 6020)

  • This Portfolio discusses the rules under §901 for determining what is a creditable income tax and the rules under §903 for determining what is a creditable “in-lieu-of” tax.


Bloomberg Tax Portfolio, The Creditability of Foreign Taxes – General Issues, discusses the following: rules relating to who can claim the foreign tax credit (including the §906 allowance of the credit to foreign persons doing business in the United States); rules for determining the amount of creditable foreign tax, including rules relating to refunds, subsidies, offsetting payments, and substantiation requirements; rules for determining when credits can be claimed, including the “anti-splitter” provisions of §909; special penalty provisions that reduce the foreign tax credit in the case of activities conducted in foreign countries with which the United States does not have normal diplomatic relations or in the case of participation in or cooperation with an international boycott; the holding period requirements of §901(k) and §901(l); the special rule of §901(m) relating to taxes in certain covered asset acquisitions; the anti-abuse rule for certain foreign tax credit generator transactions; and the application of the for-profit and economic substance tests to the foreign tax credit.

Table of Contents

I. Introduction
II. Is the Foreign Levy an Income Tax or an In-Lieu-of Tax?
III. Who Is the Taxpayer Subject to the Foreign Tax?
IV. What Is the Amount That Is Paid or Accrued?
V. Translation Rules and § 905(c)
VI. When Can the Foreign Tax Credit Be Claimed?
VII. Denial of Credits for Otherwise Creditable Foreign Taxes

Carolyn Dupuy
Carolyn Dupuy
Partner (Retired)
Weil, Gotshal & Manges LLP
D. Kevin Dolan
D. Kevin Dolan
Shearman & Sterling LLP