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Treasury Mulls Withholding-Tax Issue on Foreign Tax Credit Regs

May 4, 2022, 6:29 PM

The Treasury Department is holding open the possibility of making changes to address concerns about whether foreign withholding taxes on royalties will continue to be eligible for U.S. foreign tax credits, a Treasury official said Wednesday.

The issue concerns new regulations on foreign tax credits that Treasury issued in December, narrowing the kinds of foreign taxes that companies can credit against their U.S. tax bills. Some companies and tax practitioners have complained the new rules would render foreign withholding taxes ineligible for the credits even though they’ve qualified in the past.

Treasury has discussed the matter with taxpayers and their ...