Taxpayers with affiliates located in lower tax jurisdictions may seek to reduce their income subject to US income tax by using transfer pricing arrangements that artificially shift income away from (or deductions to) the US, in favor of the lower tax jurisdiction. To combat these abuses, the transfer pricing rules give the IRS the power […]
The US generally taxes non-US Persons on “territorial income,” not “worldwide income.” Territorial income taxed by the US includes: Income effectively connected with a US trade or business (ECI), and US source income that is not effectively connected with US trade or business. Absent application of a superseding tax treaty, ECI, after allowable exclusions, exemptions […]
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