INTRODUCTION

With all the attention that is focused upon the inability of the United States government to facilitate harmony and solution in the legislative and executive branches regarding national debt, it might be a moment to reflect upon just where the implications of debt default arise. In a more indirect way, those implications do have a bearing upon taxation and governmental policy. They present real issues for accountant’s managing international business structures. (For reference see Currency and International Financial Centers, 30/September 2013, TaxConnections, International, Tax Blogoshere, United States.)

Government policy impacts and has transmission effects that ripple across foreign investment considerations regarding direct investment in the United States from offshore. That impacts integration of the global market place. As will be touched upon, the international financial system is integrated to the extent that a decision by a sovereign as to its monetary policy, alone, impacts its base currency, its eurodollar currency, and all the cross currency relationships across the globe. The uncertainty created by loggerhead dramatics does not promote global stability requisite to sound financial taxation planning.

EFFECTS OF FOREIGN SOVEREIGN IMMUNITY AND ACT OF STATE DOCTRINE

In connection with considerations given to these financial effects, it is appropriate to engage the concepts referred to as Sovereign Immunity and the Act of State Doctrine. These concepts are enforcement barriers in litigation. Equally important, the Act of State Doctrine impacts one of the vital considerations of sovereigns and policy. To adequately explain the Act of State Doctrine, it is helpful to contrast it with the doctrine of Foreign Sovereign Immunity. Read More