RSM Resources

Under economic pressure from the World Trade Organization (WTO), Congress is considering repeal of a foreign-trade incentive known as the extraterritorial income (ETI) exclusion. The ETI exclusion is one of two legally designated benefits designed to reduce the burden of double taxation — domestic and foreign — on exports of U.S.- manufactured products and export-related services.

Although ETI exclusion repeal will create a tax-savings void for some exporters, there is good news for small and mid-sized companies. Owner-managed exporting businesses can recoup — or even exceed — their tax savings by creating an interest charge-domestic international sales corporation (IC-DISC).

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