International Tax

U.S. International Taxation of Telecoms (Portfolio 6760)

  • This Portfolio analyzes the U.S. federal income tax treatment of entities engaged in providing telecommunications services.


Bloomberg Tax Portfolio, U.S. International Taxation of Telecoms Portfolio provides an overview of the various types of telecommunications service providers, the services they provide and the main regulatory bodies responsible for shaping global telecommunications policy. The Portfolio also provides a historical discussion of the U.S. telecommunications industry and a summary of the recent trends in international deregulation of the telecommunications industry, including the Telecommunications Act of 1996 and the World Trade Organization’s Basic Agreement on Telecommunications.

The Portfolio then examines the telecommunications tax issues surrounding permanent establishments and U.S. trade or business concepts; the U.S. sourcing rules on Space and Ocean Income and International Communications Income under §863(d) and (e) respectively. The Portfolio also analyzes the depreciation issues surrounding both wireline and wireless assets, the excise tax on “communications services” as defined by §4251, and whether certain telecommunications assets constitute real or personal property, including FIRPTA issues involved in owning telephone cables and Indefeasible Rights of Use in dark fiber.

The Portfolio concludes with a discussion of the taxation of Indefeasible Rights of Use on dark and lit fiber and an examination of the Subpart F consequences of income from Indefeasible Rights of Use Agreements on dark and lit fiber owned by controlled foreign corporations.

Table of Contents

I. Introduction
II. Overview of the Telecommunications Industry
III. Types of Services
IV. Overview of the History of the U.S. Telecommunications Industry
V. Telecom Regulatory Organizations
VI. Trends in International Deregulation
VII. Taxation of Internet Providers and E-Commerce
VIII. Overview of Certain International Joint Ventures
IX. Permanent Establishment and U.S. Trade or Business
X. Source of Income
XI. U.S. Federal Tax Depreciation of Assets Used in the Telecommunications Industry
XII. Communications Excise Tax
XIII. Real Property and Telecommunications
XIV. Indefeasible Rights of Use
XV. Taxation of Certain Government-Owned Telecoms

Marc Ganz
Ernst & Young LLP
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