Discussion:How is a foreign company taxed in the U.S. in the following scenario...
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| Revision as of 04:51, 17 May 2007 Riley2 (Talk | contribs) (IntlTax, seems t) ← Previous diff |
Current revision IntlTax (Talk | contribs) (Riley, you are c) |
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| {{ForumReplyPost|UserID=Riley2|Date=17 May 2007|Text=IntlTax, seems that Article 5(d) of the treaty would cause the sales to be taxable in the United States if one enterprise controls the other or if there is common control.}} | {{ForumReplyPost|UserID=Riley2|Date=17 May 2007|Text=IntlTax, seems that Article 5(d) of the treaty would cause the sales to be taxable in the United States if one enterprise controls the other or if there is common control.}} | ||
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| + | {{ForumReplyPost|UserID=IntlTax|Date=17 May 2007|Text=Riley, you are correct. Article 5, paragraph 4(d) of the treaty provides exactly as you say. The technical explanation to the treaty provides that “[an Australian] enterprise which maintains goods in [the United States] which goods were either purchased [in the United States] (and not previously processed [outside the United States]) or produced [in the United States] by it or in its behalf, and are then substantially processed [in the United States] by a related enterprise is deemed to have a permanent establishment in [the United States].”}} | ||
Current revision
Discussion Forum Index --> Tax Questions --> How is a foreign company taxed in the U.S. in the following scenario...
| 15 May 2007 | |
| An austrialian company sells manaquins online. A u.s. purchaser orders one via the company's website. The Australian company subs out the manufacture of a manaquin to my client, based in Michigan. Is the Australian company subject to U.S. taxation on that online sale to a U.S. purchaser via the web? | |
| 15 May 2007 | |
| Not usually unless the US company is related in any way and then yes, they are taxed on income. As well, if the Australian company has an office or any establishment in the US, then they are taxed on income attributable to that US office...
Online sales (at present mind you) are not considered engaged in a trade or business in the US... | |
| 15 May 2007 | |
| ASSUMING that the Australian company qualifies for treaty benefits under the U.S.-Australia Income Tax Treaty, the question is whether the Australian company has a permanent establishment (PE) in the U.S. A PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
If the Australian company itself doesn't have a fixed place of business in the U.S., then the fixed place of business of the Australian company's dependent agents in the U.S. may cause it to have a PE. If the Michigan company controls, or is controlled by, the Australian entity, the related status itself will not cause the Australian entity to have a U.S. PE. | |
| 16 May 2007 | |
| Agreed....if the Australian company uses an INDEPENDENT agent, then no PE is established. Be careful how you define this one :) | |
| 17 May 2007 | |
| IntlTax, seems that Article 5(d) of the treaty would cause the sales to be taxable in the United States if one enterprise controls the other or if there is common control. | |
| 17 May 2007 | |
| Riley, you are correct. Article 5, paragraph 4(d) of the treaty provides exactly as you say. The technical explanation to the treaty provides that “[an Australian] enterprise which maintains goods in [the United States] which goods were either purchased [in the United States] (and not previously processed [outside the United States]) or produced [in the United States] by it or in its behalf, and are then substantially processed [in the United States] by a related enterprise is deemed to have a permanent establishment in [the United States].” | |
