The domestic international sales corporation is a concept unique to tax law in the United States.
The initial mechanism was through a Domestic International Sales Corporation (DISC), an entity with no substance which received tax benefits.
Complexities can arise, however, in making calculations of the permitted DISC income due to rules designed to help maximize the subsidy.
The United States counterclaimed that European tax regulations concerning extraterritorial income were also GATT-incompatible.
These cases were settled, however, by the Tokyo Round Code on Subsidies and Countervailing Duties (predecessor to today's SCM), and the GATT Council decided in 1981 to adopt the panel reports subject to the understanding that the terms of the settlement would apply.
104, 110 (2017), stated:In 1971, Congress “provided special tax treatment for export sales made by an American manufacturer through a subsidiary that qualified as a ‘domestic international sales corporation’ (DISC).” ...That authority was largely replaced by provisions regarding foreign sales corporations (“FSC”), ... as set forth in the Deficit Reduction Act of 1984, ... A qualifying FSC presented tax advantages for its parent company within the United States because a portion of the FSC’s export income was exempt from taxation.