Showing posts from May, 2018

What's a Patent or Intellectual Property (IP) Box?

What is a patent box? - A patent box (or IP box) is a tax incentive that allows business income from the sale of patented products to be taxed a lower rate than regular income.
What kind of business income qualifies for the lower patent box tax rate? Most patent box nations allow income from more than just patented products to qualify. Some countries have gone further and established “innovation boxes” that allow income from designs, copyrights, models and trademarks to also be taxed at the lower patent box rate. And with the broadest definition of IP-sourced income, China extends its patent box to allow income from certain types of commercial “know-how”, such as process innovation, to qualify for the lower rate. 
Why haven’t I heard more about patent boxes? Patent boxes are relatively new. While Ireland was the first nation to develop a patent box in 1973, the other nations with them (Belgium, China, France, Luxembourg, Netherlands, Spain, Switzerland, UK) all put them in place in…

Pros and Cons of a BVI Entity

Up until the US invasion in 1989, Panama was the premier off-shore jurisdiction but the BVI came to prominence after that event.  The British Virgin Islands (BVI) is often called the grandfather of all IBCs.  IBC stands for “international business company,” originally from the International Business Companies Act of 1984 in the British Virgin Islands.  It has since been copied—with slight variations—across many jurisdictions. 
For so many international entrepreneurs, the BVI is now the go-to jurisdiction for an offshore company.When asked why the BVI?Most entrepreneurs would probably say that it’s because it’s a well-known or popular jurisdiction.Almost a synonym for an offshore company.But is it worth it?

How does it work
The United Kingdom in general and the City of London in particular, has long been considered a global financial center. Today London is rivaled only by New York City as far as financial hub cities go. This helps explain the popularity of the BVI.On one hand this ov…

Ensure Your U.S. Accounting Team knows International Tax

The IRS is hiring and training more than 3,000 agents to enforce its Foreign Account Tax Compliance Act (FATCA). If your US tax team is unfamiliar with International Tax Issues, you may be putting yourself and your business at risk.
Validating tax information, especially for global partners, can reduce the likelihood of paying out to “suppliers” who are actually fraudsters or criminals. The IRS is also making Form 1042-S filings part of the standard tax return examination. Organizations are generally aware of the need to report 1099 income, but it seems that many are not so aware of the even greater compliance required for reporting payments made to foreign entities.

Form 1042
Forms 1042, 1042-S and 1042-T are United States Internal Revenue Service tax forms dealing with payments to foreign persons, including non-resident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.
Every withholding agent or intermediary, whether U.S. or foreign, who has …

UK Forces Overseas Territories to Set Up Public Beneficial Ownership Registers

In a landmark decision, the UK government announced that all UK overseas territories will have to create a public beneficial ownership register by December 31, 2020, disclosing who owns companies registered in their jurisdiction.
A coalition of Labour Party and several conservative MPs pushed through this regulation, which ultimately had to be accepted by Theresa May’s government despite efforts to introduce a more lenient proposal. Foreign Officer Minister Alan Duncan said about the ruling, “We have listened to the strength of feeling in this house on this issue and accept that it is without a doubt the majority view of this house that the overseas territories should have public registers.” However, Duncan did mention that passing laws for the overseas territories “without their consent effectively disenfranchises their elected representatives,” and that parliament “would have preferred to work consensually.” One thing to keep in mind is that this ruling will not extend to the UK’s …