Treasury Proposes New Rule Tackling Foreign Tax Credit Fears (1)

The Treasury Department proposed long-awaited new measures aimed at reassuring companies that some foreign taxes they pay are still eligible for the US foreign tax credit—a status the companies have feared might be in jeopardy.

The measures, in a new rule (RIN 1545-BQ46) Treasury issued Friday, would give companies a way to make sure their foreign royalty withholding taxes can continue to qualify for the credit. The rule also would make clear that a country’s restrictions on whether taxpayers can recover their costs don’t necessarily prevent their taxes there from being eligible for the credit.

Companies have ...