Main tax rules of the USA

There are no general legal restrictions on capital flows in the United States, but temporary sanctions and embargoes on currency transactions with certain countries or companies may apply. The financial statements of legal entities are maintained in accordance with US GAAP as developed by the Financial Reporting Standards Board.

Principal legal forms: Corporations, limited liability companies, trusts, partnerships, limited liability partnerships, private entrepreneurs and permanent establishments of foreign companies. A legal entity is recognized as a U.S. tax resident if it has been registered under the laws of the United States or under one of its states.

Profit of resident legal entities is subject to federal income tax in the USA and in any other country of the world. Profit of foreign subsidiaries of U.S. legal entities is subject to federal taxation if it is returned to the head office in the United States.  Profit of foreign legal entities is subject to federal taxation in the U.S. only if it arises as a result of doing business in the U.S.

All profits of U.S. legal entities derived from any type of trading and financial activities are subject to taxation. The financial statements provide for a number of depreciation costs, and tax discounts are provided for a number of costs aimed at financing production processes. Dividends paid by U.S. legal entities are excluded from the taxable profit of the recipient in the amount of 100% to 70%, depending on the share of his ownership of the assets of the paying entity.

Capital gains are included in the taxable profit of American legal entities. When determining the amount of capital gains, only capitalization losses may be taken into account, and no losses from any other activities shall be taken into account. Losses of the current reporting period may be taken into account in determining the profit of 2 previous and 20 subsequent years.

Income of U.S. corporate entities received in other countries is subject to U.S. taxation, net of payments made by the entity to meet its tax obligations in other countries. Preparation of tax returns is a very complicated process and many companies hire special companies for this work. Here is an example of a good tax preparation tucson company https://southwesttaxassociates.com/.

Withholding tax in the United States

  1. Licenses, fees and royalties: A 30% tax is levied in most cases on royalties, fees and licenses paid by U.S. entities to foreign corporations. The amount of this tax can be reduced if such a reduction is provided for by the relevant intergovernmental agreements.
  2. Dividends: A 30% tax rate is applied in most cases of dividend payments by U.S. legal entities to foreign corporations. The amount of this tax may be reduced if such a reduction is provided for by the relevant intergovernmental agreements.
  3. Interest payments: A 30% tax rate is applied in most cases of interest payments by U.S. legal entities to foreign corporations. The amount of this tax may be reduced if such a reduction is provided for by the relevant intergovernmental agreements.