USA Tax Treaties with other countries

United States TAX TREATIES with other countries

The United States has signed Double Taxation Agreements (DTA) with 68 countries.
Under these DTAs, residents of foreign countries are taxed at a reduced rate or are exempt from U.S. income taxes on certain items of income they received from sources within the United States.
If there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates of nonresidents.

United States Tax Treaties with Taiwan

United States Tax Treaties with China

Email: phx4ww@evershinecpa.com
or

Contact by phone in the Texas time zone:
The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685

We set up below judgment criteria on Treaty application:

Scenario:
If you are not a United States legal resident, and if your resident country has DTA with the United States, and if you are without PE (Permanent Establishment), please go to Section Ａ.
If you are not a United States legal resident, and if your resident country has DTA with the United States, and if you are with PE (Permanent Establishment) please go to Section Ｂ.
If you are not a United States legal resident, and if your resident country has no DTA with the United States, please go to SectionＣ.

Section Ａ:
Scenario: If you are not a United States legal resident, and if your resident country has DTA with the United States, and if you are without PE (Permanent Establishment), it will be redeemed as “non-United States Domestic Sourced Income”.
That means the United States will levy zero-tax.
However, you still need to send the zero-tax application to the United States Tax Bureau for being approved.
Below, we will let you understand through Q&A.

DTA-Q-10:
美國的哪些外國法律居民公司可以依DTA申請沒有常設機構(PE)下零稅率?
In the United States, which foreign legal resident company can apply for zero tax rate without PE under DTA?

DTA-A-10:
The United States has signed DTAs with the following 68 countries:

DTA-Q-20:
為什麼在DTA下該國外資沒有常設機構 (PE)之外資所得，可以享受零稅率?
Why does the Country’s foreign capital without a permanent establishment (PE) in the United States, under the DTA enjoy a zero tax rate?

DTA-A-20:
It follows Article 5 and Articles 7 in the DTA Treaty. The article defines if a foreign entity has PE in the United States.
Article 7 regulates if no PE, non-United States domestic sourced income will not be levied tax in the United States.

DTA-Q-30:
哪些情況被視為沒有PE，外資在該國設立子公司會被視為外資的在該國的子公司嗎?
Under what circumstances are deemed to have no PE, and will the establishment of a foreign-funded subsidiary in the United States be regarded as a foreign-funded subsidiary in the United States?

DTA-A-30:
According to DTA Article 5 item 7, A Wholly Foreign Owned subsidiary in the United States will not be treated as PE because it is a separate legal entity.
That means if a United States Subsidiary pay a service fee to non-United States Parent Company through a service contract signed between subsidiary and non-United States Parent company.
as an investor, a non-United States Parent Company can apply zero tax.
As for if paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by the United States Tax Bureau.
Please see the United States Transfer Pricing webpage.

DTA-Q-40:
外資在美國設立分公司或辦事處，可否適用沒有PE下的零稅率?
If a foreign company establishes a branch or office in the United States, can the zero-tax rate without PE be applied?

DTA-A-40:
According to DTA Article 5 item 2, If a foreign company sets up a branch or Office in the United States, then will be considered as United States domestic Income.
But According to DTA Article 5 item 4, if an Office is only doing a preparatory or auxiliary activity, will apply a zero-tax rate.

DTA-Q-50:
美國依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for the United States to apply for zero tax rate under DTA without PE?

DTA-A-50:

1. Provide Form W-8BEN-E – Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) to the withholding agent/ payer before income is paid or credited. (Do not send this Form to the IRS.)
2. Form 2848 – Power of Attorney and Declaration of Representative must be accompanied if Form W-8BEN-E is completed by an agent acting on behalf.
3. The foreign corporation provides TIN (Taxpayer Identification Number) and certifies that the foreign corporation is a resident of a treaty country and is a beneficial owner of the income.

Section Ｂ:

Scenario: If you are not a United States legal resident, and if your resident country has DTA with the United States, and if you are with PE (Permanent Establishment), your income will be considered as United States domestic sourced income.
As for levying Tax Rate, please be aware:
if United States Tax rate > DTA Rate, adopt DTA Rate; if United States Tax rate < DTA Rate, adopt United States Rate.
Below, we will let you understand through Q&A

DTA-Q-60:
被視為美國來源所得的判定要素?
What are the factors that are deemed to be the country’s domestic source income?

DTA-A-60:
Definition of source income in the United States.

1. Income is from U.S. sources if it is paid by U.S. domestic corporations. Eg: dividends.
2. Property that produces the income is in the United States. Eg: Royalties.
3. Services for which the income is paid were performed in the U.S. The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer.
4. Interest is paid from the payer who is resident in the United States.
5. A payment is treated as being from sources within the U.S. if the source of the payment cannot be determined at the time of payment, such as fees for personal services paid before the services have been performed.

DTA-Q-70:
DTA第五條及第七條優先於美國來源所得的判定要素?
Do Article 5 and Article 7 in the DTA take precedence over the United States determination factors on United States domestic sourced income?

DTA-A-70:
When DTA is applied, in the event of a different PE definition between United States domestic tax laws and Article 5 in the DTA, the definition under the DTA shall prevail the domestic regulations.
When DTA is applied, if a foreign company is defined as without PE (Permanent Establishment) in the United States, then will be considered non-United States domestic sourced income, in the event business profit is relevant to this issue, the clause in Article 7 in the DTA zero-rate tax can be applied accordingly.
In this scenario, please see section A.

DTA-Q-80:
當非美國稅務居民有美國來源所得，不考慮DTA 情況下，美國稅法扣繳稅率多少?
When non-tax residents of the United States have the United States domestic sourced income, what is the withholding tax rate according to United States tax regulations excluding DTA?

DTA-A-80:
Publication 515 states the Withholding of Tax on Foreign Persons including Nonresident Aliens and Foreign Entities.
Generally, a foreign person is subject to US tax on its US source income.
Most types of US source income received by a foreign person are subject to US tax of 30%.
A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person’s country of residence and the United States.

The withholding tax rates under domestic law are:

Business Profits – 30%
Dividend – 30%
Interest (General loan) – 30%
Royalties fee – 30%
Technical services – 30%
Professional services – 30%

DTA-Q-90:
If DTA Tax Rate is higher than the United States tax rate, apply which tax rate?

DTA-A-90
As for levying Tax Rate, please be aware:
if United States Tax rate > DTA Rate, adopt DTA Rate; if United States Tax rate < DTA Rate, adopt United States Rate.

DTA-Q-A0:
當非美國稅務居民有美國來源所得，依DTA優惠稅率申請的程序為何?
When non-tax residents of the United States have the United States domestic sourced income, what is the United States application procedure based on the DTA preferential tax rate?

DTA-A-A0:

1. Provide Form W-8BEN-E – Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) to the withholding agent/ payer before income is paid or credited. (Do not send this Form to the IRS.)
2. Form 2848 – Power of Attorney and Declaration of Representative must be accompanied if Form W-8BEN-E is completed by an agent acting on behalf.
3. The foreign corporation provides TIN (Taxpayer Identification Number) and certifies that the foreign corporation is a resident of a treaty country and is a beneficial owner of the income.

Section Ｃ:

DTA-Q-B0:
As an investor, if your country has not signed DTA with the United States, what kinds of tax rates when you have United States relevant income?

DTA-A-Q0:
If you are not a United States legal resident, and if your resident country has no DTA with the United States,
Whether you are with PE or without PE, all kinds of income will be levied according to United States domestic sourced income.
Besides, it will be levied by United States Tax Rates.
The withholding tax rates under domestic law are:
Business Profits – 30%
Dividend – 30%
Interest (General loan) – 30%
Royalties fee – 30%
Technical services – 30%
Professional services – 30%

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Phoenix Evershine BPO Service Limited Corp.
E-mail: phx4ww@evershinecpa.com
or

Contact by phone in the Texas time zone:
The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685

or
For how to exchange data files between your Finance Accounting System and Evershine  Cloud Accounting  Information System,
please send an email to HQ4phx@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address:Dale Chen

Additional Information

Evershine CPAs Firm Headquarters
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Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
Skype: oklahomekerry

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