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March 29, 2015 - Phil Hodgen

Non-U.S. Software Company, U.S. Customer, and Withholding Tax

I received an email via Hackernews and figured I would answer it here, because this is a common question. This is likely to be the first of many discussions of this topic. For what it is worth, my username on HN is philiphodgen.
Question
Lightly edited (and ignoring the "how much would it cost to hire you?" question), here is what X.Y. (not his real initials, of course) on HN asked:
I am a $COUNTRY resident running a Hong Kong based software business, and a US based client tells me he needs to withhold 30% foreign taxes on the payments made to my company. I am sure this is not the first time you have seen this, and I wonder what's the typical procedure in this case. (There are no mentions of taxes in our contract, it is first time both parties have engaged in this type of transaction.)
American Business Abroad Nonresidents with US Activities
September 16, 2013 - Phil Hodgen

Simplicity

“Simplicity is hard work. But, there’s a huge payoff. The person who has a genuinely simpler system – a system made out of genuinely simple parts, is going to be able to affect the greatest change with the least work. He’s going to kick your ass. He’s gonna spend more time simplifying things up front and in the long haul he’s gonna wipe the plate with you because he’ll have that ability to change things when you’re struggling to push elephants around.”

— Rich Hickey, Creator of the Clojure programming language

See Rich Hickey’s Rails Conf 2012 Keynote Speech. (YouTube).... continue reading

American Business Abroad Foreign Business Activities in the USA
September 13, 2013 - Phil Hodgen

International Tax Planning Comes Third

Tax planning across borders is complicated.  A massive public company has the budget to deal with complex international tax problems.  Privately-held businesses must deal with the same tax rules that Apple, Google, and Ford face.  But they don’t have the budget to deal with the legal and accounting costs that those highly complex rules will trigger.  And more importantly, they cannot afford the opportunity cost—top management will spend too much time wrestling with tax problems, and not enough time running the business.

Let’s call these companies mini-multinationals.  Multinational because they do business in more than one country, and mini because they aren’t huge, whatever your definition of “huge” may be. ... continue reading

American Business Abroad
April 27, 2012 - Phil Hodgen

Oh, what a tangled web we weave (Subpart F edition)

Oh what a tangled web we weave, When first we practise to deceive!
Sir Walter Scott, Marmion, Canto vi. Stanza 17

I have been doing cite-checking and editing for a friend’s international tax treatise and as a result I have been living in Subpart F recently.

Two interesting points here.

Subpart F + Subpart G = Subpart F

The first is of interest to tax lawyers only. When we say “Subpart F” we are wrong. The subject matter is actually contained in Subpart F and Subpart G. I never realized this until last night, while perusing a footnote.

Start with a lie .... continue reading
American Business Abroad
January 13, 2012 - Phil Hodgen

Apple, $82 Billion of Cash, and Tax Policy

Via Glenn Reynolds I was pointed to a TUAW article that referenced a SeekingAlpha article about Apple, its mythical mountain of cash, and the Law of Unintended Consequences.  (That, by the way, is a demonstration of the fabulosity of the interwebs.  Hyperlinks and attributions back to the source.  The internet is just one person talking to another.)

Back to tax policy and unintended consequences.  This stuff is right up my alley because this type of tax planning is What We Do here at the Hodgen Law Group Tax Ranch & Rocket Factory.

Put this blog post under the heading of “Unintended Consequences of International Tax Policy.”

Apple Inc.... continue reading

American Business Abroad