Serocki, James
January 2007
International Journal of Business Research;2007, Vol. 7 Issue 1, p170
Academic Journal
This article provides an overview of the tax rules and underlying policy considerations regarding the international tax system for a U.S. corporation (USCORP) commencing foreign operations. A USCORP must deal with many new tax laws and regulations, layered upon domestic operation tax rules, when commencing foreign operations (i.e. "going global"). With the U.S. being a modified worldwide tax system, tax provisions have been enacted in order to mitigate the inherent double taxation disincentives. Certain foreign entity forms have dramatically different tax results including liberal income deferral rules and flow through characteristics which require further tax laws to reign in potential abuses. Tax rules such as foreign tax credit and subpart F must be understood and managed to control the worldwide effective tax rate. A USCORP faces many new tax challenges in establishing a foreign entity and navigating the numerous complex international tax provisions when commencing foreign operations.


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