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EU Warns U.S., Again, That Export Deduction May Be WTO Violation

May 7, 2019, 10:17 PM

A deduction for exports, introduced in the 2017 tax overhaul, is “most likely breaching U.S. obligations under the World Trade organization,” the European Union wrote in a letter to the U.S. Treasury Department and Internal Revenue Service.

  • The 2017 tax overhaul introduced the foreign-derived intangible income (FDII) provision, which gives companies a deduction on income from sales they make to foreign persons or for foreign use.
  • FDII is “most likely a prohibited export subsidy” under WTO rules, the letter said, because it doesn’t offer the same benefits for domestic sales and the size of the deduction is linked ...