[20070424]RS20746_出口税收优惠与WTO：域外收入排斥与外国销售公司.pdf

Order Code RS20746Updated April 24, 2007Export Tax Benefits and the WTO: The Extraterritorial Income Exclusion andForeign Sales CorporationsDavid L. BrumbaughSpecialist in Public FinanceGovernment and Finance DivisionSummaryThe U.S. tax codes Foreign Sales Corporation (FSC) provisions provided a taxbenefit for U.S. exporters. However, the European Union (EU) in 1997 charged that theprovision was an export subsidy and contravened the World Trade Organization (WTO)agreements. A WTO ruling upheld the EU complaint, and to avoid retaliatory tariffs,U.S. legislation in 2000 replaced FSC with a redesigned export benefit, the“extraterritorial income” (ETI) provisions. The EU maintained that ETI was also notWTO-compliant, and WTO decisions again supported the EU while approving the EUsrequest for tariffs. The EU began to phase in tariffs on U.S. goods in March 2004. In October 2004 Congress approved legislation (P.L. 108-357) that repealed ETIwhile implementing a mix of business tax benefits not explicitly related to exports.While the EU lifted its tariffs, it also lodged a complaint with the WTO, objecting to therepeal legislations phase-out provisions, and in 2005 a WTO panel supported th