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US Inbound Corner

US Inbound Corner is a bulletin of the latest tax developments affecting businesses investing into the United States. Written by professionals of the Deloitte member firms, the newsletter provides invaluable insights on a broad range of topics affecting US inbound taxpayers.​

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February 2015

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February 2015

BEPS Action 7 – Preventing the Artificial Avoidance of PE Status – Potential Effect on Inbound Supply Chains: On October 31, 2014, the OECD released a public discussion draft on BEPS Action 7, Preventing the Artificial Avoidance of PE Status (“the Draft”). The Draft set forth options for changes in three central elements of Article 5 of the OECD Model Tax Convention, which defines “Permanent Establishment.”

Putting It All Together: Using technology to drive tax business processes: The tax department that embraces new technologies and fully utilizes their capabilities will find itself on the path to the “tax department of the future” and playing a more strategic role in the enterprise.

Taxation of US Real Property Transactions (FIRPTA): Inbound investors should be wary of the imposition of additional tax, withholding obligations, and information-reporting requirements under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). Due to the potential tax cost and complicated reporting requirements under FIRPTA, foreign investors should analyze transactions involving US real property or stock of a US corporation prior to any disposition. In many cases, some action is required by the date of the disposition, even where no tax is due.

Earnings Stripping Considerations of Section 163(j) for Inbound Investors: Inbound investors should be aware of the US earnings stripping limitation rules of section 163(j) when structuring US acquisitions due to the tax risks and opportunities involved. When introducing debt, an inbound company should consider if the debt will be treated as such for US tax purposes, the interest expense on the debt will be deductible, and the interest deduction will be limited under US earnings stripping rules.

Frequently Asked Questions about the Changing Expatriate Environment: How are you affected by the US Individual Expatriation Tax Rules? The US imposes income tax on the worldwide income of its citizens and green card holders even if they reside overseas.

Country Spot Light

- Switzerland: Draft legislation on Corporate Tax Reform III published

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