International Tax | Ideas |
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IdeasStripped Distributors Distribution operations in high tax countries should be
structured as commissionaires or stripped distributors. Functions and risks are reduced for the
distribution company, thus reducing the profit properly allocable to that company.
Avoid 956 U.S. shareholders of controlled foreign corporations (CFCs)
must include in their income the amount of any loans by the CFC to the
shareholder or a related U.S. person. Multinational corporations with treasury activities overseas can avoid
this income inclusion with the right planning.
Unitary Commissionaire/First Sale Use California as a tax haven! Taxpayers who export products from the U.S.
to their foreign sales subsidiaries can reduce foreign income tax, foreign
customs duty, and state income taxes and defer federal income tax on sales
overseas.
Intangibles Migration Reduce foreign tax and defer U.S. tax by developing foreign
marketing intangibles in an offshore sales subsidiary. With careful planning and structuring, a low
tax foreign subsidiary can earn a substantial portion of profits from foreign
sales activities without triggering U.S. tax.
Deconsolidate with Preferred In computing the foreign tax credit limitation and DISC
benefits, interest expense must be apportioned on an consolidated group
basis. This can be mitigated if foreign
subsidiaries and sales are placed in a deconsolidated affiliate.
Cross Chain Sale to Free Trapped Taxes Use a sale between foreign subsidiaries of shares of another
foreign subsidiary to move E&P and taxes. Careful planning and E&P studies are required to avoid artificial
income. The utility of this idea has been limited in the jobs bill (HR 1586) passed and signed August 10, 2010.
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