Foreign earned income is treated as earned in the company's home country regardless of where it is generated. Therefore, it can result in double taxation. There is an exclusion allowed under U.S. tax law for income earned in a foreign country for the first 2 years a corporation does business in that country. Foreign earned income is identified as earned in a country in which income taxes are paid on that income, and these taxes are either deducted from income or offset through a tax credit on 4.5 . taxes. The U.S. taxes foreign earned income at half the tax rate for domestically earned income