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Tax Legislation Provides Incentives for Foreign Investment in U.S. Funds
Washington, DC, August 9, 2003 - The Institute supports “The American Jobs Creation Act of 2003” (H.R. 2896)—legislation that removes significant U.S. tax barriers to foreign investment in U.S. funds.
Rep. William Thomas (R-CA), Chairman of the House Ways and Means Committee, introduced H.R. 2896 in July 2003 to repeal the Foreign Sales Corporation-Extraterritorial Income Act regime, under which short-term capital gains and U.S.-source interest income generally are exempt from U.S. withholding tax if they are received directly by a foreign investor, but not if the income flows through U.S. funds.
The Institute supports the enactment of legislation that would make U.S. funds available to foreign investors without adverse withholding tax treatment. In a recent letter to Rep. Thomas, Institute President Matthew P. Fink notes that H.R. 2896 would provide foreign investors in U.S. funds with the same tax treatment whether investments are made directly or through foreign funds—a significant incentive for foreign investors in U.S. funds.