Branch Interest Tax

Just like the branch profits tax, this law was introduced in1986 to reduce disparity for foreign corporation conducting business through a US branch and a foreign corporation conducing such business through a domestic subsidiary.

Interest paid by a US branch may constitute US-source income subject to 30% withholding tax.

The law also imposes a corporate-level tax at 30% on the excess of the amount of interest deductible by a foreign corporation over the amount of interest paid by the US trade or business.

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