The IRS said it plans to modify the regs relating to certain triangular reorganizations involving foreign corporations.
Specifically, in Notice 2016-73, the tax agency announced it will alter the rules affecting the treatment of property used to acquire parent stock or securities in triangular reorganizations involving one or more foreign corporations, as well as describe the consequences to persons that receive parent stock or securities in those reorganizations. (more…)
Luis Ramirez, Principal
ASL International Group
U.S. taxpayers with maquiladora operations in Mexico won’t be exposed to double taxation if they enter into a unilateral advance pricing agreement (APA) with Mexico’s tax agency under terms that were negotiated by the U.S. and Mexico.
The companies would have to reach the agreements with the Large Taxpayer Division of Mexico’s tax agency, the Servicio de Administración Tributaria (SAT). (more…)
The IRS recently issued an International Practice Unit (IPU) that outlines for its examiners the general rules for determining the source of fixed, determinable, annual or periodical (FDAP) income.
The tax agency stated that source determination is “critically important,” as the U.S. only has jurisdiction to tax FDAP income sourced to the U.S. A withholding agent that is unable to establish the source of FDAP income would generally be required to presume the income is U.S. sourced and obliged to withhold tax. (more…)
India’s Central Board of Direct Taxes (CBDT) recently clarified that income from the transfer of unlisted shares will be taxed as a lower rate capital gain rather than as business income.
The tax department’s move is aimed at avoiding tax disputes/litigation and maintaining a uniform approach. However, such treatment isn’t applicable in situations where:
- The genuineness of transactions in unlisted shares itself is questionable,
- The transfer of unlisted shares is related to an issue pertaining to lifting of the corporate veil, or
- The transfer of unlisted shares is made along with the control and management of the underlying business.
(more…)
In a new International Practice Unit (IPU), the IRS provides audit tips to its examiners on a taxpayer’s affirmative use of Internal Revenue Code Section 482, “Allocation of Income and Deductions.” That section of tax law gives the IRS the authority to make adjustments between or among members of a “controlled group,” if a controlled taxpayer hasn’t reported its true taxable income. (more…)
It is very common for U.S. parent companies to include key non-resident alien employees of their foreign subsidiaries in their stock option plans. What happens when the non-resident exercises the options or sells the options? Is the non-resident subject to withholding tax? Is there a U.S. tax filing requirement?
It is that time of the year again when I am working on audits of U.S. companies with significant international operations, either in the form of wholly owned subsidiaries or branch offices. And my observations while performing these audits have resulted in this compilation of common errors while accounting for foreign currency, recording translation adjustments and finally the culmination into consolidated financials.