Opportunities in a Global Economy
It’s a global economy and the world continues to get smaller. Companies are steadily growing beyond U.S. borders, which leads to significant complexity. More projects and initiatives are being outsourced internationally, including sourcing of raw materials and components, selling or buying finished goods, moving people across borders, acquiring overseas investments or companies, integrating global investors, and more.
KSM understands that navigating the waters of rapidly changing international tax planning and compliance can be complicated. Our in-house international tax experts work closely with our U.S.-focused tax professionals to provide a unique team focused on increased knowledge and resource sharing. Our goal is to provide a seamless international tax plan that meshes with your other domestic tax planning. We guide our clients through multifaceted considerations as they embrace an international presence.
KSM’s international tax services fall into three categories: international structuring, U.S. tax compliance to report international activities, and foreign withholding and reporting calculations.
Identifying the Tax Structure Best Suited for Your International Activities
The tax structure that may be most appropriate for international operations is generally very different from the structure utilized by U.S.-only companies. Our professionals are well-versed in the planning opportunities that are presented by these differences and can help align your initiatives, structure, and tax compliance with your overall business goals.
We frequently help companies navigate matters such as:
Entity formation considerations: including entity classification elections, cross-border mergers and acquisitions, and IC-DISC planning for U.S. exporters
Efficient utilization of foreign tax credits: both at the business and individual level including (but not limited to) foreign tax credit calculations (both direct and deemed paid) and maximization of the FDII deduction for C corporations
Maximizing benefits: from international tax treaties, minimizing withholding obligations, and Section 962 elections for individuals with GILTI or Subpart F inclusions
Calculating and minimizing the impact of deemed income inclusions: GILTI, Subpart F, and PFIC planning and calculations
Earnings and profits determinations: to aid in repatriation planning and other attribute studies
Transfer pricing issue spotting: helping to identify where there may be exposure related to transferring goods between related parties and connecting them with appropriate transfer pricing advisors
U.S. Tax Compliance: Reporting International Activities to Mitigate Risk and Exposure
One of the major obstacles companies encounter when managing their international assets and activities is tracking and completing the many required U.S. tax forms in order to avoid drastic and costly penalties caused by noncompliance. Through careful analysis and planning, KSM can help with this process, even consulting on a company’s delinquent tax filings and helping them through each step of the delicate process of identifying and implementing the most efficient way to come back into compliance. We have significant experience working through the IRS’ various disclosure programs and draw on our legal contacts as needed to make sure our clients are protected.
International operations can generate a variety of U.S. filing obligations, and we are well-versed in completing and filing an array of required forms, including the following:
- FinCEN Report 114, Report of Foreign Bank and Financial Accounts
- Form 5471, Controlled Foreign Corporations
- Form 5472, Foreign Owned Corporations
- Form 8865, Controlled Foreign Partnerships
- Form 8858, Foreign Disregarded Entities
- Form 2555, Earned Income Exclusion for Individuals
- Form 1116 and Form 1118, Foreign Tax Credits
- Form 8804, Withholding on Partnership Allocations to Foreign Partners
- Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
- Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Tax Income (GILTI)
- Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Tax Income (GILTI)
- Form 8621 – Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund
- Form W-8BEN, Foreign Persons Claim for Reduced Withholding Rates
- Form 8833, Treaty Based Return Disclosures
- Form 8832, Entity Classification Elections
Foreign Withholding and Reporting Calculations
Navigating the various withholding regimes when making payments of U.S. source income can be confusing and complicated. KSM has experience with FDAP, ECI, FIRPTA, and FATCA withholding and can help clients create and institute a process to ensure their continued compliance with all required withholding rules. Having a process in place can help mitigate any withholding exposure for both the U.S. company as well as any foreign companies and individuals.
Maximize Your Global Opportunities
KSM’s international tax team can support all aspects of your international business and connected activities with tax planning and consulting services to businesses and individuals. Additionally, as a member of PrimeGlobal, a leading worldwide network of independent accounting firms, we have contacts in countries across the globe to efficiently help you coordinate your international team. Let our experience help you achieve even greater success. Contact us to discuss your unique international business needs.
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