Tax Implications of International Joint Ventures: Federal and State Tax Issues, Deal Points, Tax Treaties, Planning

Tax considerations for international joint ventures require a detailed understanding of complex federal tax statutes, rulings, and regulations as well as a basic understanding of the fundamental tax rules of other jurisdictions and tax treaties. Tax counsel and advisers must recognize critical tax issues regarding each stage of the joint venture from formation to cessation.

The focus of this presentation will be on joint ventures between U.S. and foreign enterprises engaged in multinational activities in each other’s jurisdictions as well as in third country markets.

We will examine various types of structures, including a jointly-owned corporation serving as a holding company, forms of parallel ownership, and joint ventures that are treated as partnerships for U.S. tax purposes. In examining these various structures our focus will include minimization of excessive withholding taxes which result from “sandwiching” a company resident in Country A between two companies resident in Country B. We will also examine certain equalization arrangements utilized to minimize distributions otherwise subject to withholding taxes.

We will discuss the most important tax considerations applicable to each joint venture participant with respect to the formation of the joint venture (including any transfers of intangibles) as well as the ongoing tax treatment of the joint venture’s operations and its eventual unwinding.

U.S. residents are generally entitled to the benefits of tax treaties entered into between the U.S. and various other nations. Likewise, a foreign enterprise may also be the beneficiary of such treaties. We will consider the impact of the overall structure as well as the type of entity holding the joint venture so that tax treaty benefits are preserved for each enterprise through it's a chain of ownership.

Finally, the panel will cover tax reporting with respect to the joint venture’s financial results. This will include a discussion with regard to country-by-country tax reporting.

Listen as our panel discusses the federal and state tax considerations and essential tax provisions and deal points when structuring an international joint venture or partnership. The panel will also provide insight for utilizing tax subsidies and tax credits, tax treatment of goodwill and any contributed intangibles, and tax implications of capital, interest, dividends, and royalties.

1. Structuring options and key tax considerations
2. Tax planning tools and pitfalls to avoid
3. Detailed tax distribution considerations and how to draft for them
4. Tax implications of capital, interest, dividends, and royalties
5. Best practices for tax counsel and advisers

The panel will discuss these and other key issues:

• What are the structuring options and key tax conisderations for cross-border joint ventures and partnerships?
• What are the key tax considerations and necessary provisions for joint venture and partnership agreements?
• What tax planning tools are available and how do they interact with joint venture and partnership operations?
• What are the tax implications of capital, interest, dividends, and royalties?
• What benefits, if any, may be available under a given tax treaty?

Learning Objectives

After completing this course, you will be able to:

• Recognize key tax issues stemming from international joint ventures and partnerships
• Identify when to demand tax distribution provisions and how to draft them for a variety of tax scenarios
• Understand how to determine and include provisions for applicable tax rates, distribution timing scenarios, and the concept of tax distributions as an "advance" on future distributions
• Understand the tax implications of capital, interest, dividends, and royalties stemming from international joint ventures

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization with supervisory authority over other preparers/accountants in preparing complex tax forms and schedules and preparing for partnership audits. Specific knowledge and understanding of partnership structures, operating agreements, allocations and distributions and IRS partnership audits.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).