Question

Are US exporters subject to income tax in importing countries? Provide examples.

Answer 1

In implementing an export plan, exporters usually do not find tax issues. But this is not smart, because a little attention to tax issues provides the opportunity for US exporters to lower their US income tax liability and theoretically helps US exporters to sidestep international income tax liabilities. The tax concerns U.S. exporters should address when implementing an export plan relate to U.S. Federal income taxes, state income taxes, and taxation of foreign income.

U.S. exporters who sell directly to international customers and make sell sales by their own efforts either by responding to international inquiries or through sending out traveling sales employees overseas.
US exporters whose export sales are made to international buyers by associated intermediaries such as offshore sales workers, offshore representative offices, offshore branches or offshore subsidiaries.
US exporters whose export sales to international customers are made by unknown intermediaries, such as dependant sales agents, independent sales agents, dependant distributors or independent distributors.

All US exporters no matter what sort are subject to federal income taxes. US income tax policy refers all US taxpayers 'earnings worldwide to US income taxes, regardless of where they obtained the income or the currency in which they received the money. For US exporters, US federal income tax is levied against the export profits of the US exporters.

State income tax policy varies from state to state. Consequently, in the sense of this paper, it is not possible to provide an overview of how the states tax US exporters 'income. Nevertheless, it is necessary for US exporters to note that certain states follow the same rules as the IRS when taxing their taxpayers 'worldwide profits.

Foreign-country taxation of the export income of US exporters varies depending on whether a US exporter exports directly or through an intermediary. The commissions received by a US exporter's sales agents are paid by foreign countries. They also tax the margins of resale gained by offshore subsidiaries and distributors of a US exporter.