Dynamic Effects of Foreign Tax Credits on Multinational Corporations

Rosanne Altshuler and Paolo Fulghieri
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Paolo Fulghieri: INSEAD

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: The U.S. tax code allows multinational corporations to credit tax payments made to foreign treasuries against domestic tax obligations, up to their U.S. tax liability on foreign source income. If foreign tax payments exceed the U.S. tax liability on foreign source income the corporation is said to be in "excess credits." We study how the incentives for investment abroad through foreign subsidiaries change as parent corporations transit into and out of "excess credits." We also examine how the presence of foreign tax credit carryforwards affects tax-related investment incentives.

Keywords: foreign tax credit; international taxation; multinational corporations (search for similar items in EconPapers)
JEL-codes: H25 H32 H87 (search for similar items in EconPapers)
Date: 1996-10-02
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Working Paper: Dynamic Effects of Foreign Tax Credits on Multinational Corporations (1992)
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Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:199406

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