Multinationals

Determining exactly whose income, gains and assets are subject to the U.S. federal tax system is a complex inquiry, requiring a comprehensive approach without shortcuts. After the rules of international tax principles under the Internal Revenue Code (the Code) and related Treasury regulations have been reviewed and applied – just when you think the process is complete – an international tax treaty or a new tax law can change everything.

With the ever-evolving nature of international taxation, non-U.S. residents or non-U.S. citizens with activities in the United States and their U.S. advisors need to become aware of fundamental, international tax principles in order to avoid the undue application of taxes. This is of importance due to the extraordinarily high level of inbound wealth to the United States. Estimates of recent years report transfers of offshore private wealth into the U.S. exceeded $500 billion annually, originating principally from Latin America and Asia-Pacific.

A paramount first step for an international tax overview is a discussion with an experienced tax professional related to jurisdictional reach of U.S. income tax and the estate, gift and generation skipping transfer (GST) tax system (collectively referred to as the U.S. transfer taxes). In comparison to tax regimes of other countries, the U.S. federal tax system is one of the most aggressive in the world; however, careful planning of inbound activities can mitigate its effect.