I am looking to set up a branch of our company in the USA.
We currently service north and south american customers from Dubai but we want to get closer to our customers.
Our solutions and business will still be conducted from Dubai (service delivery and contracts etc) but we want support people on the ground in the US to manage relationships.
We are trying to avoid being taxed for our solutions - as we are not today - and therefore want to send a few sepcialised people to support customers.
I appreciate the individuals would be taxed on their income whilst on site - but how do we limit and corporate tax etc.
You can't get a sufficient answer to this question on a general website for tax questions. Much more information is needed. It is necessary to understand the structure of your business and how it will operate in the US. You can't avoid US corporate taxes on US profits if the company has a permanent establishment in the US and business activity is sourced here. There are many tax rules and regulations to consider, but here a few options for you to explore:
1) Set up a US branch office with a permanent establishment in the US. The foreign company would be required to file Form 1120F. You will have to consider branch profits taxes. State & local tax issues must also be considered. For example, if the branch does business in New York, the corporation is required to report worldwide income apportioned based on certain US/worldwide factors. Every state in the US has different tax rules. Transactions with all foreign affiliates must be disclosed on the US returns. 2) Set up a US subidiary corporation as a separate legal entity. The entity will file Form 1120 and pay tax on US profits. Transactions with foreign affiliates must be disclosed on US tax returns. 3) Specialists working in the US - I assume they employees (with visa issued to the company). You will have to consider and comply with all employment tax rules (federal, state and local.) If specialists are based in the US, the company probably has a permanent establishment and is required to file US tax returns.
I recommend that you meet with specialist (CPA or tax attorney) to plan your US operations and compliance with US tax laws and reporting obligations.
answered 17 Mar '10, 18:36