The Foreign Corrupt Practices Act: compliance issues in the tax and customs arena

Among the many changes in the legal and business landscape following the Enron scandal and the Sarbanes-Oxley Act of 2002 has been a dramatic increase in the pace and ferocity of enforcement of the Foreign Corrupt Practices Act (FCPA), which prohibits improper payments to influence foreign officials who have the power to affect a company's business. In addition, section 162(c) of the Internal Revenue Code, which predates the FCPA, prohibits the deduction of bribes, including payments that violate the FCPA, as business expenses. Tax personnel and tax advisers can take a variety of steps to protect their companies and navigate the minefield of FCPA risk in the customs and tax arena. The following are practical steps to prevent improper tax and customs payments: 1. Supervision of affiliates and subsidiaries. 2. Review of third parties. 3. Use of FCPA due diligence of tax practices in mergers and acquisitions.