federal income tax otherwise imposed on such foreign-source income
. To that end, the source-of-income rules of sections 861 through 865 determine the sources of gross income for U.S.
The finance minister in his speech has explained that such restriction had created difficulties for overseas or non-resident Pakistanis, as they were not required to file tax return for their foreign-source income
but were restricted from buying property or motor vehicle in Pakistan.
Therefore, persons eligible to file declaration under the Act may include, both Pakistan-source and foreign-source income
, it added.
Under both systems, US-source income of multinational corporations is meant to be taxed at the US rate applied to domestic corporate income, and foreign-source income
of foreign-resident corporations is outside thejurisdiction of the US tax law.
Additional Benefits That Justify Tax on Foreign-Source Income
Choosing a tax structure that allows foreign-source income
to be deferred from U.S.
tax liability imposed on foreign-source income
, subject to certain limitations.
The discussion draft would provide a 95 percent dividends-received deduction for dividends paid out of the foreign-source income
. This deduction would apply to a controlled foreign corporation (CFC) of a U.S.
However, the study countries tax other types of foreign-source income
such as royalties.
corporations computed a separate foreign tax credit for a defined group of statutory categories of foreign-source income
or "baskets" (each of these is described separately in the Explanation of Selected Terms section).
resident selling personal property would generate U.S.-source income from the sale of personal property, and a nonresident would generate foreign-source income
When a firm is deficit credit, it pays tax at the rate [[tau].sub.US] regardless of the amount of FTCs applied to foreign-source income
, so reducing allowable FTCs via interest allocation does not affect the current-year tax liability or tax incentives to use domestic debt.