All the president's taxmen

Article Abstract:

Bill Clinton promises to make foreign-controlled corporations in the US pay their fair share of American taxes. The President-elect aims to collect $45 billion in four years from foreign-owned companies and branches that siphon profits outside the US by enforcing the internationally recognized arm's-length standard for transfer pricing. Clinton plans to carry this out by expanding the IRS staff devoted to transfer pricing cases and by forbidding ex-government employees from dealing with the government bodies they formerly served. However, the transfer pricing regulations drafted by the IRS raised an international uproar because these deviated from what is generally accepted by other tax regulators. Nevertheless, Clinton refuses to propose legislation requiring foreign firms to report a minimum amount of US taxable income. On the other hand, he has not stated his stand on tax imposition on foreign shareholders of US companies.

Clinton, Bill, Tax policy

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The uncharted minefield of US company tax

Article Abstract:

US company tax law is extremely complicated, and recently amended legislation will give the IRS the ability to levy a new economic standard as pertains to foreign corporations doing business in the US, further complicating the tax picture. Studies commissioned by the IRS indicate that the sum of expenses exceeds the income of foreign owned businesses in the US with the result of tax underpayments that could be greater than $12 billion. The IRS believes that underreporting is a result of related party transactions in which market entry costs which should be capitalized are deducted and of expense payments more properly related to foreign parties. New legislation will allow the IRS to examine related party transactions by foreign companies and substitute its own figures if it does not agree with the companies' figures.

Analysis, Tax accounting

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Don't mess with old Uncle Sam

Article Abstract:

New intercompany pricing and information reporting requirements were recently issued by the IRS for foreign-owned companies operating in the US. The new regulations aim to prevent non-US businesses from manipulating transactions to minimize their income tax liabilities to the US government. The areas where changes were introduced include the prioritization of transfer-pricing strategies, the definition of a cost-sharing arrangement, and the ulitization of profit data to confirm or create transfer prices. UK companies would do well to take note of these changes considering that their annual investment in the US reaches about $20 billion, making the UK the US's largest foreign investor.

Finance, taxation, & monetary policy, Aliens

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