Oxford University Centre for Business Taxation
The new non-territorial U.S international tax system
Introduction
A fading truism - and not, as we will see, a very useful one - holds that countries may apply either of two distinct types of international tax systems to multinational companies (MNCs) that they classify as domestic residents. Under a pure "worldwide" system, resident MNCs' foreign source income (FSI) is taxed, but foreign tax credits are allowed. Under a pure "territorial" system, FSI is exempted and foreign taxes are ignored.