definitions Foreign sales corporation (FSC)

Foreign sales corporation (FSC)

In the U.S. tax code, a specialized sales corporation whose income is lumped into the same income basket as that of a domestic international sales corporation. A special type of corporation created by the Tax Reform Act of 1986 that is designed to provide a tax incentive for exporting U.S.-produced goods. Refers to a provision of the U.S. tax code that grants income-tax rebates to American exporters if they form what may be a largely artificial foreign subsidiary called an FSC. This has been the subject of a trade dispute with the EU which complained to the WTO that this constitutes an illegal export subsidy.