A great debate over the United States corporate tax reform is underway. Foreign tax accountants are waiting to see how this will change the Form 1120F (reporting for an international company with U.S. income) and the Form 5471 (reporting for a controlled foreign corporation).
The Form 1120F includes the Branch Profits Tax. A tax on U.S. equity and foreign interest expense.
Form 1120F’s Branch Profits Tax is a surprise attack tax. Small international businesses rarely spend the time needed to avoid this tax. Quarterly proforma tax returns are required to manage this tax. Corporate minutes are needed to justify the retention of liquid assets on the U.S. branch.
The word “branch” is misleading. A foreign corporation does not need a branch (such as an office or a factory) for this tax to apply. The tax is on U.S. equity that is not necessary for an active U.S. business.
The second part of the branch profits tax is in the method of the corporation’s debt financing.
Foreign tax accountants are expecting the new Form 1120F to include an easy to use worksheet for computation of the interest expense portion of the branch profits tax.
International and Global Tax Strategies as the U.S. reduces the business tax rate.
The best international and global tax structure includes an IRS approved Nevada Self-directed trust.
Optimizing your tax savings requires thinking outside the box. Using a foreign trust for tax planning and asset protection will keep you and your family safe.