On Foreign Soil Congress is proceeding with a plan to allow U.S. exporters to establish foreign sales corporation in other countries.

Congress is moving ahead with legislation to amend a tax lawthat allows U.S. exporters to establish foreign sales corporations(FSCs) abroad. With FSCs, companies can lower their income tax rateon the profits made from selling products in other countries. (Formore details, see February 2000's "TaxTalk.")

The legislative push is in response to a recent ruling from theWorld Trade Organization (WTO) indicating that the 1982 lawallowing FSCs provides unfair subsidies to U.S. companies. TheEuropean Union brought the complaint to the WTO.

Because of the FSC tax law, U.S. exporters receive an estimated$4 billion in tax breaks per year. The U.S. government contendsthese breaks help maintain U.S. companies' pricecompetitiveness in world markets.