Following a recent announcement by the Clinton Administration to submit its proposal to amend the Foreign Sales Corporation program to Congress, Delegate Donna M. Christian-Christensen and Delegate Robert Underwood of Guam wrote to leaders of the House Ways and Means Committee to remind them of the importance of the FSC program to the economies of the Virgin Islands and Guam.
"As you are aware, a key component of the present FSC program is the ability of U.S. companies to lower their U.S. income tax liability by channeling their export income through foreign sales corporations. Because the Virgin Islands and Guam have a tax-free relationship with U.S. taxing authorities and are under the jurisdiction of U.S. courts, we have become a natural area to set up rules and regulations to franchise FCSs," Christensen and Underwood said.
"The already ailing local economies of our respective districts cannot afford to lose the substantial economic benefits of the FSC program,"
Christensen and Underwood continued.
"In addition to the revenues generated from FSC franchise fees, derivative income is also realized by banking institutions which may hold FSC funds as
well as by hotels and retail establishments which benefit from local annual
meetings of FSC directors and shareholders.
Delegate Christensen has been working with Delegate Underwood on this issue since the World Trade Organization ruling last year that the FSC program was unlawful. "In the last two months I have met with the U.S. Trade Representative and the Treasury Department twice to discuss how the new FSC
program would continue to provide the same advantages that the USVI and Guam
currently enjoy. My office will continue to work with both agencies to insure a positive outcome for the territory."
Congress must vote on legislation to create a new FSC law by October 1, 2000
because of a successful challenge to the program in the World Trade Organization by the European Union.
