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Agents as permanent establishments: avoiding the U.S. income tax for foreign businesses

Article Abstract:

The US Tax Court found in Taisei Fire & Marine Insurance Co. v. Commissioner that Fortress Reinsurance Managers, Inc. was an agent of independent status, and the four Japanese insurance companies that Fortress did business with were not subject to US taxation. The court found that Fortress would constitute a permanent establishment of the Japanese companies under the Japan-US Tax Convention unless Fortress was an agent of independent status. The court ruled that Fortress was neither legally or economically dependent on the Japanese insurance companies.

Interpretation and construction, Tax treaties, Commercial agents

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Passive foreign investment companies

Article Abstract:

The laws addressing the deferral of passive foreign income need to be amended as they prevent legitimate foreign finance and credit companies from investing in US equities and place too large a burden on shareholders of foreign companies when the company does not comply with US reporting requirements. The basic aims of the law have been met, but amendments that classify a broader range of finance, credit and insurance companies as exempt and new reporting requirements for foreign companies are needed.

International aspects, Income tax, Passive activity (Taxation)

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Avoiding 10/50 status through CFC classification: CFC attribution rules and usufructs

Article Abstract:

US investors may realize tax advantages by structuring their investments so as to receive classification as controlled foreign corporations (CFCs), rather than as 10/50 companies. Using a usufruct is one method of achieving CFC status in certain countries even where local laws generally make CFC recognition difficult. Typically, these considerations arise in conjunction with foreign joint ventures in which CFC status would provide tax treatment preferable to 10/50 company dividend treatment.

Administration of General Economic Programs, Foreign Investment Regulations, Usage, Foreign investment laws, Foreign source income taxation, Controlled foreign corporations, Usufruct

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