International Tax Issues Flashcards
(12 cards)
What payment to a foreign person is not subject to U.S withholding tax requirements?
A customer payment for the sale of inventory within the U.S is business income, which is taxed on a net basis and not subject to withholdings.
What is foreign-derived intangible income?
Sales to a non-U.S. persons of property for use outside the U.S
What is the Advanced Pricing Agreement Program?
A binding contract between the IRS and the taxpayer by which the IRS agrees not to seek a transfer pricing adjustment for a covered transaction if the taxpayer filed its return for a covered year consistent with the agreed transfer pricing method.
What is permanent establishment?
Applies when a corporation has a place of business that generates revenue in a country that is not its home country.
How is income taxed for a foreign branch of a corporation?
It is treated as being earned directly by the domestic corporation
How is income taxed for a foreign subsidiary?
Income is not taxed until the income is repatriated to the U.S.
What is a Controlled Foreign Corporation (CFC)?
A foreign corporation where more than 50% of its stock is owned by U.S shareholders.
What is Subpart F?
A set of tax rules designed to prevent U.S. taxpayers from deferring U.S. tax on certain types of income earned by their foreign subsidiaries, specifically Controlled Foreign Corporations (CFCs)
How much foreign corporation’s stock must a U.S. person own to be demed a U.S shareholder for the purposes of the CFC rules?
Must own at least 10% of the foreign corporation’s stock
What is the Global Intangible Low-Taxed Income (GILTI)?
A minimum tax imposed on certain low-taxed income earned for CFCs. Helps to reduce the incentives for U.S. companies to shift profits to foreign subsidiaries located in low-tax jurisdictions.
What is the Base Erosion and Anti-Abuse Tax (BEAT)?
A minimum tax designed to apply to large U.S. corporations-speifically those with average annual gross receipts of $500 million or more the past 3 years.
When must a foreign person file Form 1120-F, U.S. Income Tax Return for a Foreign Corporation?
To report income earned by a U.S. branch
