Submission No. 3 to Senate Committee on Finance – Comments on Option Y

Abstract

The Senate Committee on Finance international tax reform staff discussion draft issued November 19, 2013 sets out two possible approaches (Option Y and Option Z) for international tax reform. This letter makes comments on Option Y. The subject matter of these comments include:

1. Strengthening the Foreign Tax Credit Limitation So As To Prevent Job, Asset, Risk and Income Shifting

2. Interplay of New Code §956 Low-Taxed Income and the Foreign Tax Credit

3. Expenses (Other than Interest) Allocable to Exempt Income of a Controlled Foreign Corporation

4. Foreign Tax Credit Limitation — Treatment of Foreign Withholding Taxes on Actual Distributions

5. Amendment to Code §543 Definition of Foreign Personal Holding Company Income

6. Amendment to Code §952(c)(1)(B)(iii) Definition of Qualified Activity

This is Submission 3 of 7 Comment Letters Provided to the Committee.

Keywords: international tax reform, territorial system, deferral system, Option Y

JEL Classification: H21, H25, K34, E62