As part of the Act of 2017, the taxation of Foreign-Source Income will not create tax credits or deficits when declared as dividends to the U.S. parent.

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The Act of 2017, also known as the Tax Cuts and Jobs Act (TCJA), introduced a participation exemption system for foreign-source dividends received by U.S. corporations from their foreign subsidiaries. This means that foreign-source dividends are not subject to U.S. federal income tax when they are declared by a foreign subsidiary and received by a U.S. parent corporation (as long as certain conditions are met). Additionally, the TCJA repealed the previous tax credit system for foreign-source dividends, which means that U.S. corporations cannot claim foreign tax credits for foreign taxes paid by their foreign subsidiaries on their foreign-source income. As a result, the taxation of foreign-source income will not create tax credits or deficits when declared as dividends to the U.S. parent.

As Part of the Act of 2017, the Taxation of Foreign-Source