Where does the tax apply?


Worldwide Principle                          

Tax US here, US there and them here

Need definition of US person and US corporation: Sec. 7701(b)

Need rules to determine the source of income

Interacts w/ substance over form:

suppose US corp gets all Y from foreign source and pays dividend to foreigner: US Y? (See Sec. 861(a)(2))

Interacts with corporate entity rules:

sales among multinational corporations and transfer pricing issues

US owners of foreign investment subsidiaries: the CFC rules

Them here: Special system for non-business income of NRA's

30% flat tax on gross income w/ withholding

US there: problem of coordinating with the territorial host nation

Tax treaties

Foreign earned income allowance: 76K / yr exempt

Tax credit:

 offset US tax on foreign income with foreign tax on foreign income