Foreign Tax Credit Regs May Hit U.S. Firms in Developing Nations

Multinational companies are warning that new U.S. rules on foreign tax credits pose a particular problem for companies doing business in developing countries.

The new regulations from the Treasury Department are too restrictive and burdensome overall, business groups say. But companies that have operations and pay taxes in developing countries could feel the sharpest pinch because those countries are more likely to levy “novel” kinds of taxes on U.S. companies that won’t qualify for the U.S. foreign tax credit under the new rules, tax practitioners say.

The result, business groups fear, may be that some companies are taxed twice on ...