Branch accounting_ foreign tax credit_ Valuation allowance

The US branch in Singapore can take a credit in the US for the Bangladesh taxes paid – but those taxes are in the “branch basket” where there is a valuation allowance now that limits the ability to get a credit for the full amount of the credit today.  

There are some changes in the new US tax rules that may make it more possible to claim more of those credits – but there hasn’t been time yet to fully analyze the impact of this.  So – if a question comes up in the future about the ability to claim branch credits – let’s recheck to see what the latest is.

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TP_ Benchmark_ Mexico

 S - Changes to the mark-up percentages that are identified in this email based on further work with PWC?  Or, do these percentages still stand?  We expect that this should reconcile to the trial balance. O- The CIP write off and the success fee expense did not move the markup %'s after PwC recommended adjustments. However, there is one small amounts  related to regular fixed asset disposal operation that can slightly reduce the %'s.  S- Do you have the new #s now, or are they still in process?  If still in process, do you have an idea on timing? O- However, to be consistent with prior years where these same fixed assets disposals were not included in the markup % for the TP Study, I have not included them this year for the TP Study either.  I reported yesterday 4.58% for Mfg vs 4.44% that yo can see in the chart S-  Will these totals tie to the financial statements?  Do you expect any other changes at this point?(I would guess you are going ...
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Treaty analysis _ Germany & Thailand _ Technical services rendered by Thailand people in Germany

Q- What is tax implications for technical services performed by Thailand people in Germany? Duration of the work; 2-3 months, US entity is a benefiting entity from this work. US entity and Thailand entity are related parties and Thai company will invoice for their people's work in Germany to the US company.  1. German Withholding Tax (WHT) or Corporate Tax Exposure Even though the Thai company invoices a US entity, German tax authorities may tax the income earned from activities physically performed in Germany. • If the Thai company has a taxable presence (“permanent establishment” or PE) in Germany due to its employees working there for 2–3 months, Germany may tax the income attributable to that PE. • The presence of employees physically performing services in Germany, even temporarily, can trigger a PE under German law if: • There is a fixed place of business (e.g. office, project site); or • The work involves a “service PE”, potentially triggered under Germany–Th...
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Intercompany loan_ Capitalized Interest

  Capitalized interest specifically in the context of an intercompany loan. 1. Intercompany Loan Basics: An intercompany loan is simply a loan made between two related companies within the same corporate group (e.g., a parent company lending to a subsidiary, or one subsidiary lending to another). Like any loan, it typically carries an interest rate. The borrowing company incurs interest expense, and the lending company earns interest income. Transfer pricing rules generally require this interest rate to be set at "arm's length," meaning similar to what unrelated parties would agree to. 2. Capitalized Interest (General Accounting Principle): Normally, interest expense incurred by a company is recorded on its income statement in the period it's incurred, reducing net income.   However, accounting standards (like US GAAP ASC 835-20 or IFRS IAS 23) require or permit companies to capitalize interest costs under specific circumstances. Capitalization means adding the...
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