If you are considering investing in or having an overseas business here is a tip from tax attorney Carlos Kepke that is of considerable interest as it deals with reducing U.S. income tax.
"There are few international vehicles left that can help defer U.S. tax,
but a perfected foreign trusts in certain circumstances can.
"Let me first explain that a perfected trust is one in which has a foreign
relative as a grantor (the person who formed the trust) or a U.S. citizen
or resident who has died. Under U.S. tax law non U.S. grantors of non U.S.
trusts never have a U.S. tax liability. However if a U.S. person grants a
foreign trust, they remain responsible for income earned by that trust as
long as they live. The beneficiary is not responsible for tax on the
income. Thus when the grantor passes, so to does U.S. tax liability. Once
this trust is perfect it essentially is free from U.S. tax.
"Such perfected foreign trusts can, in some instances, be used to help
reduce United States ("U.S.") income tax of a U.S. corporation.
"An example of this could take the form of a U.S. corporation contracting
with a foreign corporation ("F.C.") owned by a perfected foreign trust for
the F.C. to undertake a feasibility study concerning the business
activities of the U.S. corporation (e.g., a study as to the feasibility of
the U.S. corporation opening new markets outside of the U.S.). The U.S.
corporation would pay F.C. handsomely but fairly for the study and take a
U.S. income tax deduction for such payment. F.C. would receive the
payment and pay no tax on it. F.C. could subcontract out the performance of
the study at a price ensuring a healthy profit for F. C..
"The keys to this Tax Tip are:
#1: The feasibility study must actually be performed.
#2: The perfected foreign trust that owns F.C.must in law be deemed
unrelated byownership to the ownership of the U.S.corporation. [This can
usually be accomplished by being sure that the foreigntrust is perfected.]"
This tip is very general in nature and if you feel that it applies to you, you should consult your legal consul or contact Carlos Kepke at email@example.com
Until next message may all your investing be good!