Q&A: Business and Tax Structures for International Corporations

by John T. Witherspoon

Q: My business sells overseas. What business and tax planning structures can benefit my business?

A: An Interest Charge Domestic International Sales Corporation (commonly called an “IC-DISC”) structure permits some export companies to pay federal tax at the dividend tax rate of 15%. This is significantly lower than the ordinary income tax rate, which can be up to 35% for certain export profits. To take advantage of this option, a new corporation, the IC-DISC, is legally formed and contracts to receive commissions from your underlying business. The main business takes a deduction on the commission while the IC-DISC can disburse the profits at the lower tax rate. Contact your individual advisors, as the creation of this long-established structure will depend upon the specific circumstances of your business.

 

Originally published in the Portland Business Journal.