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Old 02-05-2014, 04:10 AM
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Exclamation Opinion required

Hi,

Sir I have Question regarding below scenario

There is inter-company in UAE callled as (A) whose major holding company is in US. Another company in UAE called as (B) whose head office is also in US . The Company B requires the Company A to provide lab related service and they entered in to agreement but the Company A further give that work to its further inter-company Norway branch called as (C) and C performed entire work is entirely performed in Norway. Now Norway inter-company invoice its UAE inter-company A and Company A further invoice the work performed to the head office of company B in US instead of invoicing the Company B in UAE just as per term and condition of contract.


Now my simple question is what will be tax implication if Company A of UAE but having parent company is US invoice the US head office of company B .


1. Do the Us Head office of Company B withhold tax if it made payment to Company A. , keeping in view that entire work was performed in Norway by Norway Inter-Company of Company A?

2. If the tax will be applicable then what will be the rate of tax on performing services and will also appreciate your providing the section of US tax law, If liable to be withheld?

I may add that in my opinion since work was exclusively performed outside the US therefore, Company A is liable to pay any tax. However your view in this regard is required and will be highly appreciated.

Regards



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Old 02-05-2014, 10:15 PM
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Originally Posted by muneeb View Post


1. Do the Us Head office of Company B withhold tax if it made payment to Company A. , keeping in view that entire work was performed in Norway by Norway Inter-Company of Company A?

2. If the tax will be applicable then what will be the rate of tax on performing services and will also appreciate your providing the section of US tax law, If liable to be withheld?


Regards

#1;I guess it depends; aslongas co A is a non US co overseas(no presence in US), co B doesn’t w/h tax.unless service done by co A was done in US, no w/h required by co A.non us biz is not subject to tax to IRS unless it earns taxable income in US by doing biz in service.Co A does NOT file a W8-BEN as there is no beneficial interest in the US income. W8-BEN is ONLY used where there is a beneficial interest, such as when the foreign taxpayer has an ownership interest in the US company or performs services in the US.So Co B does not withhold taxes on the payments to A or submit any tax forms relative to the payments.Co B ,the payer, does keep a record of Co A's foreign address. Ideally Co B should also request a statement from co A that they are a foreign entity and not subject to US taxation.

#2;asmentioned above.As long as th eservcie was done inUS/ Co A was located in Us, then Co B must w/ h tax at 30% I GUESS



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Old 02-06-2014, 12:10 AM
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Originally Posted by Wnhough View Post
#1;I guess it depends; aslongas co A is a non US co overseas(no presence in US), co B doesn’t w/h tax.unless service done by co A was done in US, no w/h required by co A.non us biz is not subject to tax to IRS unless it earns taxable income in US by doing biz in service.Co A does NOT file a W8-BEN as there is no beneficial interest in the US income. W8-BEN is ONLY used where there is a beneficial interest, such as when the foreign taxpayer has an ownership interest in the US company or performs services in the US.So Co B does not withhold taxes on the payments to A or submit any tax forms relative to the payments.Co B ,the payer, does keep a record of Co A's foreign address. Ideally Co B should also request a statement from co A that they are a foreign entity and not subject to US taxation.

#2;asmentioned above.As long as th eservcie was done inUS/ Co A was located in Us, then Co B must w/ h tax at 30% I GUESS


The same I think that withholding tax will be charges on on US source income. In my case since Company A is foreign company and taking working from its another inter company in Norway so they all work is performed in Norway. Jst for the purpose on contract Company is billing the Headoffice of Company B in US. Its mean since no work is performed in US.

Well thanks moderator for u r reply and confirmation .



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Old 02-06-2014, 12:12 AM
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Originally Posted by Wnhough View Post
#1;I guess it depends; aslongas co A is a non US co overseas(no presence in US), co B doesn’t w/h tax.unless service done by co A was done in US, no w/h required by co A.non us biz is not subject to tax to IRS unless it earns taxable income in US by doing biz in service.Co A does NOT file a W8-BEN as there is no beneficial interest in the US income. W8-BEN is ONLY used where there is a beneficial interest, such as when the foreign taxpayer has an ownership interest in the US company or performs services in the US.So Co B does not withhold taxes on the payments to A or submit any tax forms relative to the payments.Co B ,the payer, does keep a record of Co A's foreign address. Ideally Co B should also request a statement from co A that they are a foreign entity and not subject to US taxation.

#2;asmentioned above.As long as th eservcie was done inUS/ Co A was located in Us, then Co B must w/ h tax at 30% I GUESS

Thanks thumbsup



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