Tax Study: U.S. Firms At Disadvantage.

• Position: US-based multinationals - Brief Article

The United States' highly complex tax structure for U.S.-based multinational corporations often places them at a disadvantage to their foreign competitors, concludes research from the FEI Research Foundation. Further, the consequences of an uncompetitive tax system are greater in today's global economy than ever before.

The second edition of the study, Taxation .of US Corporations Doing Business Abroad: US. Rules and Competitiveness Issues, was written by PriceWaterhouseCoopers tax experts Peter R. Merrill, Ph.D., principal, and Carl A. Dubert, senior manager. The book serves as a general guide to the principles of U.S. international taxation and the effects of tax rules on the competitiveness of U.S.-based multinational corporations.

Merrill and Dubert acknowledge many positive changes to the U.S. tax code since 1996, when the first edition of the study was published. In the current edition, they highlight areas of continuing concern to financial executives operating internationally and present the status of the U.S. in relation to other tax jurisdictions.

They point, for example, to the rules requiring the allocation of U.S. interest expense to foreign source income, which can lead to double taxation because other countries do not recognize U.S. interest expense as a deduction. Also, the U.S. continues to have more complex and...