Entering the U.S. Without Entering Its Tax System: Holding Company Structures for U.S. Operations

Foreign companies entering the U.S. market for the first time will want to consider how their operations can be structured to minimize U.S. taxes. Although sales into the U.S. can be arranged in some cases to keep profits offshore, a sufficient presence ‘‘on the ground’’ can pull sales income (and possibly other income) into the U.S. tax system.

This article discusses how business profits of a foreign corporation generally are taxed in the U.S. and suggests possible holding company structures that a foreign parent corporation can use to help insulate itself from direct U.S. tax exposure while taking advantage of treaty exemptions to reduce federal income taxes.

Co-Authored by Michael L. Chen, CPA, is a founder and partner of CWS CPA LLP.

Originally published in Bloomberg BNA’s Daily Tax Report – Ocotber, 2015.

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