Question

a. What are the tax advantages of operating in the United States through a separately incorporated domestic subsidiary

Answer 1

A foreign company is not required to conduct business in the united states through a united states entity and could instead open a branch office. Doing so, however is generally not advised for tax and liability reasons. A branch office unlike a subsidiary is not a separate legal entity of the parent company. A branch office is considered to be foreign company operating in the US . If a foreign company established a branch office in the united states and conduct business in the united states the entire company is considered to be doing business in the united states. This can subject the company to taxation on all income earned, rather than limiting taxation to the income of the branch office. Further more liability of the foreign company could not be limited to liability incurred at the branch level accordingly foreign business coming to the US do not generally elect to open a branch office unless specifically advised to do so by a US attorney.