The Foreign Tax Credit Implications of Reallocating the Income of "Digital" Taxpayers

[...]a number of countries have imposed new taxes, usually gross-based income taxes, on U.S.-based digital services companies. [...]the OECD, now without full U.S. participation, has been working on a project that I will just call the "Pillars Project" to change the rules imposing income taxes on both digital and other "consumer-facing" companies. In its current incarnation, this project would change existing rules about nexus, about the sourcing of income and particularly services income, while also radically changing the arm's-length based transfer pricing rules. [...]notwithstanding that initial openness the United States had expressed in 2019 to a broader review of the allocation of taxing rights, Treasury and USTR and the Administration more generally began pumping the brakes a bit in 2019 with a letter from Secretary Mnuchin to the OECD chief saying, "Wait a minute, we didn't sign up for mandatory changes to 'the arm's length principle' and existing nexus standards and have serious concerns about that. The same week of that letter, US Trade Representative (USTR) announced tariffs in response to the French DST on some classically French consumables and luxury products.