The US Treasury Department and Internal Revenue Service (IRS) have issued final regulations on the US exemption from withholding on portfolio interest received by foreign persons. The final regulations adopt with modifications the proposed regulations issued on this topic on 13 June 2006. The portfolio interest exemption is granted by Sections 871 and 881 of the US Internal Revenue Code (IRC), which provide that non-resident individuals and foreign corporations are exempt from US tax on US-source interest paid on portfolio debt obligations, i.e. debt obligations of corporations and partnerships in which the foreign person owns less than 10% of the...