Foreign Corporation Branches
The United States taxes foreign (i.e., non-U.S.) corporations differently than domestic corporations. Foreign corporations generally are taxed only on business income when the income is effectively connected with the conduct of a U.S. trade or business (i.e., in a branch). This tax is imposed at the same rate as the tax on business income of a resident corporation.
The U.S. also imposes a branch profits tax on foreign corporations with a U.S. branch, to mimic the dividend withholding tax which would be payable if the business was conducted in a U.S. subsidiary corporation and profits were remitted to the foreign parent as dividends. The branch profits tax is imposed at the time profits are remitted or deemed remitted outside the U.S..
In addition, foreign corporations are subject to withholding tax at 30% on dividends, interest, royalties, and certain other income. Tax treaties may reduce or eliminate this tax.
Read more about this topic: Corporate Tax In The United States
Famous quotes containing the words foreign, corporation and/or branches:
“Oh, has the foul atmosphere of foreign lands extinguished all your self-respect? Do you come back sordid and sycophantic, and the slave of opinions you would once have utterly detested?”
—Augusta Evans (1835–1909)
“What I am anxious to do is to get the best bill possible with the least amount of friction.... I wish to avoid [splitting our party]. I shall do all in my power to retain the corporation tax as it is now and also force a reduction of the [tariff] schedules. It is only when all other efforts fail that I’ll resort to headlines and force the people into this fight.”
—William Howard Taft (1857–1930)
“We are nothing but ceremony; ceremony carries us away, and we leave the substance of things; we hang on to the branches and abandon the trunk and body.”
—Michel de Montaigne (1533–1592)