An investigation of the planning and policy implications of the foreign sales corporation legislation

dc.contributor.advisorHoffman, William H., Jr.
dc.contributor.committeeMemberPratt, James W.
dc.contributor.committeeMemberShepard, Ira B.
dc.contributor.committeeMemberHorvitz, Jerome S.
dc.contributor.committeeMemberThompson, Steven C.
dc.creatorPersellin, Mark Bennett
dc.description.abstractIn 1985, the United States experienced a record $148.5 billion merchandise trade deficit. One factor allegedly detrimental to the trade balance is U.S. tax policy. This assertion is based primarily on the claim that U.S. goods suffer a heavier tax burden than those of foreign origin. U.S. concerns have successfully argued this point in lobbying Congress for legislation reducing the tax burden on export income. This study examines various export tax incentives that have been enacted by Congress. In particular, the study addresses the planning and policy ramifications of the recently enacted Foreign Sales Corporation legislation. Drawing upon documentary research, the study contrasts certain export tax practices of selected foreign countries with those of the U.S. A historical analysis of U.S. export taxation is provided in the form of a chronological review of the U.S. export tax incentives that preceded the FSC. As a result of one of these export tax incentives-- the Domestic Internatinal Sales Corporation on--the U.S. became entangled in a treaty dispute with several other contracting parties to the General Agreement on Tariffs and Trade. In an effort to resolve the DISC-GATT dispute, Congress created the FSC. An indepth analysis is provided of the various technical requirements surrounding the FSC export incentive. International tax experts were interviewed for the purpose of addressing the implications of the FSC legislation on the exporter. Incorporating the information derived from the interviews, the study outlines many of the planning considerations imposed on exporters as a result of the various FSC statutory provisions. It is shown that with adequate planning the FSC requirements may be satisfied with little difficulty or expense. Several of the FSC provisions have their origin in a GATT Council directive that outlined the requirements for a GATT-compatible export tax policy. In that statement, the GATT Council required a foreign economic processes requirement and an arm's-length pricing requirement. In its attempt to construct an export tax incentive that would be GATT-compatible, Congress included both a foreign economic processes requirement and an arm's-length pricing requirement in the FSC legislation. It is shown, however, that these FSC requirements represent only a watered-down attempt at satisfying the GATT Council's mandate. As a result, the FSC legislation's GATT-compatibility is subject to debate. The success of the FSC legislation in satisfying other underlying policy goals is also questioned.
dc.description.departmentBusiness, C. T. Bauer College of
dc.format.digitalOriginreformatted digital
dc.rightsThis item is protected by copyright but is made available here under a claim of fair use (17 U.S.C. Section 107) for non-profit research and educational purposes. Users of this work assume the responsibility for determining copyright status prior to reusing, publishing, or reproducing this item for purposes other than what is allowed by fair use or other copyright exemptions. Any reuse of this item in excess of fair use or other copyright exemptions requires express permission of the copyright holder.
dc.subjectDomestic international sales corporations--Taxation--United States
dc.titleAn investigation of the planning and policy implications of the foreign sales corporation legislation
dcterms.accessRightsThe full text of this item is not available at this time because it contains documents that are presumed to be under copyright and are accessible only to users who have an active CougarNet ID. This item will continue to be made available through interlibrary loan. T. Bauer College of Business Administration, College of Administration of Houston of Philosophy


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