American corporations that owe taxes to Panama will be allowed the U.S. foreign tax credit if payments are made to the government of ousted President Eric Arturo Delvalle, the Internal Revenue Service said Friday. The announcement was aimed at discouraging U.S. businesses from sending tax payments to the Panamanian government controlled by military strongman Manuel Antonio Noriega, which Washington does not recognize. Some large U.S.-based multinational firms recently made quarterly tax payments just in time to give that government a desperately needed infusion of cash. The foreign tax credit is designed to prevent two national governments from taxing the same dollar of income. In general, the United States will not tax income that an American corporation earns in and pays taxes on to a foreign country. The IRS announcement is the latest move in the U.S. effort to squeeze Noriega, who has been indicted in the United States on drug-trafficking charges. Delvalle, who is in hiding, has directed that all tax payments due his country be paid through the Panamanian Embassy in Washington into a special account at the Federal Reserve Bank of New York. ``This notice confirms that income taxes due to the government of Panama which are paid into such account will be considered paid to the government of Panama, and will therefore be creditable foreign taxes if all other requirements'' of the law are met, an IRS statement said. The White House, in declaring Thursday that such an announcement would be forthcoming, cautioned that U.S. businesses might expect some sanctions if they continue turning over money to Noriega. A spokesman for Eastern Airlines said the company had recently paid the Noriega government $178,000 in monthly rentals and landing fees. Texaco, Inc., routinely paid income, sales and excise taxes for March, said spokesman Peter Maneri, and sees no conflict with the position of the U.S. government. ``We do not become involved in any political activity in a host nation; we're just doing business down there,'' Maneri said.
