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Case Code: CLIBE054
Case Length: 3 pages 
Period: --  
Pub Date: 2005
Teaching Note: Not Available
Subject :Business Environment
Organization :--
Industry :--
Countries : --

Reforming the US Tax Structure *



The caselet discusses the Domestic International Sales Corporation (DISC) system and its criticism by the global community. It primarily discusses the differences between the European Union (EU) and the US over the tariff barriers. It explores the American internal tax system that gives uneven advantage to the domestic players in the US market. It takes a look at the American Job Creation Act, 2004, and the highlights of the Act.
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  • Introduction of Domestic International Sales Corporation (DISC) system in the US.
  • Replacement of DISC with Foreign Sales Corporation (FSC).
  • Phase-out of FSC regime.
  • Enactment of Extraterritorial Income (ETI).
  • Enforcement of American Job Creation Act, 2004.
The Domestic International Sales Corporation (DISC) system was introduced in the United States on January 1, 1972.

Corporations that qualified under the DISC system were provided tax benefits, which exempted the corporations from the US federal income tax on their current or retained export earnings. Many countries opposed the DISC regime as it was aimed at stimulating exports. Therefore, in 1984, it was replaced with the Foreign Sales Corporation (FSC)... ..
1. Discuss the reasons that have led to the establishment of American Jobs Creation Act of 2004.

2. Critically analyze the American Jobs Creation Act of 2004.


Domestic International Sales Corporation (DISC), tax benefits, Foreign Sales Corporation (FSC), European Union (EU), World Trade Organization (WTO), Extraterritorial Income (ETI), foreign-source income, American Job Creation Act 2004, corporate tax rate, tax breaks, tax evasion

* This caselet is intended for use only in class discussions.
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