Question

How are the inbound and outbound taxation presented by taxation?

Answer 1

The taxation department of each country has to deal with the “inbound” and “outbound” in income or activities effecting the tax incidence.

Inbound : When any US inbound income or activities is given effect to tax incidence, it means foreign corporation has income or activities in the US, not necessary that there is a import of products into US. The inbound taxation is given effect at the US only. The inbound taxation is presented through US withholding taxes, transfer pricing, outside company’s taxes on profits / interests. All these tax issues are presented under two countries income tax treaties.

Outbound : When a US Concern have non-US income or activities in other countries with or without export of any product from US. The outbound transactions of US company is addressed through foreign tax withholding, transfer pricing , tax credits from outside, etc. All these outbound tax effects are covered by the income tax treaties between two countries.