WTO hits FSCs hard overtax
The Barbados Advocate newspaperthis week reported that the World Trade Organisation has ruledagainst an American and Canadian practice of granting tax breaksto Foreign Sales Corporations (FSCs).
If such breaks are discontinuedmany FSCs registered in Cayman Islands and other territories maybe adversely affected.
That newspaper said in partTuesday, 21 August: "The FSCs are subsidiaries of Americanand Canadian multinationals which use offshore domiciles as exportingcentres for their goods and services. They also receive tax benefits.However, the European Union has criticised this, saying such supportis tantamount to a subsidy and has lodged a complaint with theWorld Trade Organisation.
"Yesterday, WTO flatlyrejected a US defence of the controversial tax break system forthe exporters and found it in total breach of global trading rules.
"The findings werereleased with the text of the panel's ruling, the outline of whichhad already leaked when sent to the European Union whichbrought the case to the WTO and to the United States earlierthis month.