Treasury Moves to Ease Limits on Foreign Tax Credits After Companies Object

WASHINGTON—The U.S. Treasury Department is softening its limits on foreign tax credits, responding to corporations that have been warning about double taxation.

The department issued corrections Tuesday to rules released in December that have drawn furious complaints from multinational companies. The change makes clear that foreign income taxes don’t have to precisely mirror U.S. income-tax rules for when certain costs can be deducted in order to qualify for foreign tax credits.

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