Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

152. Minutes of the 71st Meeting of the Council on Foreign Economic Policy⁰

March 13, 1958.¹

[Here follow a list of participants and discussion of an unrelated agenda item.]

II. CFEP 565–Tax Incentives for the Flow of U.S. Private Investment Abroad.

1. The Council on Foreign Economic Policy considered the recommendations of the Committee on Tax Incentives concerning tax incentives to stimulate private foreign investment in the underdeveloped areas. The report and recommendations of the Committee were distributed to Council members on March 6, 1958 as CFEP 565/2.²

2. The CFEP approved the Committee recommendation that United States tax on the income of a foreign branch of a domestic corporation should be deferred until such income is transferred to the United States or to another developed country. The CFEP also approved the Committee recommendation that dividends from a foreign subsidiary of a domestic corporation should be treated as foreign branch income, and that extractive industries which elect to use percentage depletion allowances should not be eligible for the deferral privilege.

3. Before reaching a final decision on the 14-percentage point tax credit as outlined in CFEP 565/2, the CFEP agreed to consider a proposal by the Treasury Department which would subject income derived from the active conduct of a trade or business abroad to a flat 10 per cent tax on net income. The CFEP requested the Committee on Tax Incentives to study the Treasury proposal to determine whether it should be substituted for its present recommendation. The Committee was asked to submit its report and recommendations by April 1, 1958.³

[Here follows discussion of other agenda items.]

Paul H. Cullen
Lt. Col, USA Secretary

0. Source: Eisenhower Library, CFEP Records, Office Series, Council Minutes (1958). Confidential.
1. The meeting was held at the White House. Randall’s personal account of this meeting is ibid., Randall Journals, CFEP, 1958, vol. VIII, February 23–April 28, 1958, March 14 entry.
2. Not printed. (Eisenhower Library, CFEP Chairman Records, Staff Series, CFEP (9))
3. On April 22, Randall decided to table further consideration of this issue for the remainder of the Eighty-fifth Congress. (Ibid., Randall Journals, CFEP, 1958, vol. VIII, February 23–April 28, 1958, April 23 entry)