Delivering U.S. International Tax Advice to U.S. Clients Doing Business Abroad

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1 Delivering U.S. International Tax Advice to U.S. Clients Doing Business Abroad

2 OGLE INTERNATIONAL TAX ADVISORS OUR INTERNATIONAL TAX PRACTICE INCLUDES BOTH CPAS AND ATTORNEYS WITH BIG 4 AND FORTUNE 500 EXPERIENCE. OUR PROFESSIONALS ARE DEDICATED TO THE HIGHEST STANDARDS OF SERVICE AND COMMITTED TO EXCELLENCE. WE HAVE CREATED A CULTURE THAT IS BASED ON TEAM BUILDING, INDIVIDUAL EMPOWERMENT, AND LEADERSHIP.

3 OUTBOUND TAX PLANNING Ogle International Tax Advisors specialize in advising multinational enterprises on international tax matters. Our clients include both public and privately held businesses. We also assist other regional CPA and Law firms who do not have expertise in international tax. Our international tax services include: structuring of foreign investments, export tax incentives, repatriation strategies, transfer pricing, and mergers & acquisitions. In the area of structuring foreign investments, we advise clients on how to structure foreign investments to minimize their global effective tax rate. We also assist clients with their on going tax compliance needs related to their foreign investments. By offering both international tax planning and compliance services, we simplify the technical complexities our clients face with their foreign investments. U.S. TAXATION OF FOREIGN INCOME U.S. taxpayers pay tax on their worldwide income. This differs from many other countries where only income from domestic sources is taxable. Since most U.S. taxpayers setup foreign businesses in countries with a local income tax, the double taxation of profits is possible. However, foreign tax credits are generally available for U.S. taxpayers who have foreign business income to help alleviate double taxation. U.S. taxpayers that own foreign businesses through foreign corporations can generally defer paying U.S. taxes on profits earned by their foreign corporations until the profits have been repatriated back to the U.S. shareholders in the form of dividends. This concept is generally referred to as deferral. However, the U.S. tax law has anti-deferral provisions for certain passive and tainted income that requires the U.S. parent to be taxed immediately on their foreign subsidiary s income independent of any dividends. Delivering U.S. International Tax Services to Global Clientele Corporate Office: 8130 Lakewood Main Street, Suite 208, Bradenton FL (T) (F) Miami Office: Waterford BU.S.iness Park, 5201 Blue Lagoon Drive, Miami FL, (T) (F)

4 OUTBOUND TAX PLANNING U.S. taxpayers that own foreign businesses directly (treated as branches of domestic companies) or as partnerships are taxed immediately in the U.S. on foreign profits and repatriation is not needed to establish the U.S. tax liability. Losses are also currently deductible. This concept is generally referred to as flow through. LEGAL ENTITY OPTIONS FOR FOREIGN INVESTMENTS U.S. Clients are usually structure their foreign business activity in one of he following tax categories: Corporate - Treated as a corporation for both U.S. and local country purposes Transparent - Treated as fiscally transparent (flow through) for both U.S. and local country purposes Hybrid - Treated as a corporation in the local country and as transparent in the U.S. Reverse Hybrid - Treated as transparent in the local country and corporation in the U.S. The decision to hold foreign investments through a deferral or flow through structure can have a major impact on a U.S. taxpayer s global effective tax rate. The financing of the foreign structure is equally important in managing the U.S. taxpayer s global effective tax rate. We offer our clients detailed advice as to how to setup foreign businesses and how to unwind the structures when the business is being sold or dissolved to minimize their global effective tax rate. 4 OGLE INTERNATIONAL TAX ADVISORS DELIVERING U.S. INTERNATIONAL TAX SERVICES TO GLOBAL CLIENTELE

5 OUTBOUND TAX PLANNING IMPORTANT FACTORS FOR FOREIGN INVESTMENTS The tax rules of the country where the foreign investment is located (We work closely with local country tax counsel and accountants) The client s other foreign investments and overall U.S. foreign tax credit position The client s legal entity structure (i.e. Corporation or flow through entity) The presence of a comprehensive income tax treaty with the local country The need for a holding company The current and expected profitability of the client and their foreign investment (s) The cash flow requirements of the client and their foreign investment (s) (Repatriation Strategy) Current and planned debt financing for the client and their foreign investment (s) Activities, functions, and ownership risks of the foreign investment (Transfer Pricing) Is a sweat equity partner a part of the foreign investment Self employment tax considerations 5

6 OUTBOUND TAX PLANNING EARLY PLANNING PAYS DIVIDENDS Early international tax planning pays large dividends for U.S. clients who seek advice at the start of a new foreign investment. This start up time period is sometimes known as the testing of the waters in foreign market (s). Because the scarcity of capital is generally more sensitive in the start of a new venture, management sometimes takes the approach of testing the business before investing in a tax structure. This approach usually leads to a higher effective tax rate, and it can be very costly to convert into a more desired structure after the new venture becomes profitable. TAX COMPLIANCE The Internal Revenue Service (IRS) requires a host of annual tax forms for U.S. taxpayers related to foreign investments. The tax penalties associated with the failure to timely file some of these forms can result in substantial penalties (i.e. $10,000 per form). Some of the common IRS forms required for foreign investments include: Form Information Return of U.S. Persons With Respect To Certain Foreign Corporations Form Information Return of U.S. Persons With Respect To Foreign Disregarded Entities Form Return of U.S. Persons With Respect to Certain Foreign Partnerships Form TDF Report Of Foreign Bank And Financial Accounts We are experienced in preparing these and other IRS forms that permit a seamless approach in combining the international tax planning and compliance functions with one advisory group.

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