Changes to the foreign tax credit under newly signed legislation (Pub. L. No. 111-226) represent significant alterations to the cross-border tax regime and create a host of questions for taxpayers, Ernst & Young LLP practitioners said Aug. 12.

“These provisions represent fundamental changes in some long-standing international tax rules,” Barbara Angus, a practitioner in E&Y’s national tax and international tax services, said in moderating a webcast on the law President Obama signed Aug. 10. She noted that since some of these proposals were in legislation to extend expiring tax provisions, Congress likely will have to find new revenue raisers for that bill when it returns from recess.

Key changes highlighted in the webcast included a provision to prevent taxpayers from splitting income and taxes to get the foreign credit, a proposal to prevent abusive “hopscotching” of assets in tax code Section 956 transactions, and language tightening the ability of companies to get the foreign credit in so-called covered asset acquisitions.

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