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time as the subsidiary applies the offset against its own
liability for mainstream tax, payment by the subsidiary of the
unrefunded portion of the ACT.
The Technical Explanation was not available to both
contracting parties in the negotiation of the U.S.-U.K.
Convention. Rather, it was prepared by the Department of the
Treasury (Treasury) to aid Congress during the ratification
process in understanding the U.S.-U.K. Convention. With regard
to the Technical Explanation's approach to the ACT, S. Exec.
Rept. 95-18, supra at 36-37, 1980-1 C.B. at 429, states:
The Treasury's technical explanation also set
forth a complex set of rules and examples intended to
be used for purposes of determining the earnings to
which ACT payments by a U.K. corporation are to be
attributed for purposes of computing the indirect U.S.
foreign tax credit.
* * * * * * *
These rules raise difficult and complex issues. In
recommending the ratification of the proposed treaty,
the Committee does not intend that these rules
necessarily serve as a model for future treaties.
Further, in recommending the ratification of the
treaty, the Committee does not intend to adopt or
reject the amplifications of the foreign tax credit
rules contained in the Treasury technical explanation.
* * *
As to the Technical Explanation, the Court of Appeals for the
Federal Circuit, in Xerox Corp. v. United States, 41 F.3d at 655-
656, commented: "One may debate the meaning of this cool
treatment of the Technical Explanation. What is clear, however,
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