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Originally posted by dawnstar
I guess the United states isn't susposed to offer tax breaks to companies like Microsoft Corp., Boeing Co. or General Electric Co.
So the EU wants to saction products such as steel, textilels, food, and automotive parts....
Foreign Sales Corporations
Under legislation dating from 1984, which was eventually declared unacceptable by the World Trade Organization after a complaint from the European Union, the US Internal Revenue Code authorized the establishment of foreign sales corporations (FSCs), being corporate entities in foreign jurisdictions through which US manufacturing companies could channel exports. 15% of the revenue concerned was exempted from corporation tax, meaning (at 35% tax) that companies kept 5.25% more of their revenue.
A very high proportion of qualifying companies made use of the FSC legislation, typically through tax-exempt companies in the US Virgin Islands, the Bahamas, Barbados and Bermuda.
After the World Trade Organization (WTO) finally ruled in early 2000 that the FSC constituted an illegal trading subsidy, the US passed replacement legislation called The Extra-Territorial Income Exclusion Act.
This in turn was ruled illegitimate by the WTO, and after much to-ing and fro-ing, including the imposition of permitted tariffs by the EU during 2004 on many US imports, US President George W Bush finally signed a law in late 2004 which repealed the FSC-ETI legislation in favour of broader tax reliefs.