• Paying corporate tax on income in the USA

My company is based and owned in the Philippines by a Philippines national. I know that the Philippines has a tax treaty with the USA. Recently, we invoiced a US company for a service (one of our trainers flew to the US and conducted from training there), and they have withheld 30% on the payment for tax. I would like to know a. if the tax treaty has anything to lower this rate and b what I can do to minimize paying taxes in the US as a whole. Thanks
Asked 7 years ago in Corporate Tax

Probably you addressed this query to a portal which is predominately for Indian Taxation.

A quick look at the treaty between Philippines and USA gives the impression that your tax liability depends upon the interpretation whether you have permanent establishment in USA or not, as you flew one of your trainers to the USA. In my view, it may not be possible to consider the temporary stay of the trainers as having permanent establishment, unless there are other facts, which may prove it otherwise.

As the source of income is from USA, you will have tax liability in USA in respect of the service rendered by you but the credit for such tax liability can be used for setting off your tax liability in Phillipines, as per the applicable tax laws.

As regards your specific queries,

a) I think the treaty has nothing to lower the rate of 30%

b) If you have permanent establishment in US, you may lower the tax liability by claiming expenses incurred on such service.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

Dear Sir,

Request you to get in touch with a US based tax professional because to answer this question one need to have a deep understanding of US tax law.

We are predominantly Indian tax expert.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

I glanced through the Treaty downloaded from google search. I'm not sure if it is the latest version. If you have the latest version, it can be reviewed.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

Hello Sir,

Sorry to sy but not an expert in US Tax Laws. Apologies for the inconvenience.

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Dear sir, The 25% amount is on your profit and not on your income. it can not be lower than that.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

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