Congress over the years has repealed, under pressure from the World Trade Organization, many trade incentives that have been available to US businesses. However, one powerful tax-savings vehicle remains – the Interest Charge Domestic International Sales Corporation, or "IC-DISC".
The IC-DISC has been in place since 1984, however it was not until passage of the Jobs and Growth Tax Relief Reconciliation Act of 2004 ("JGTRRA") that its use could provide significant tax savings. Under this Act, dividends paid by an IC-DISC qualify for the favorable 15% tax rate on dividend income. This reduced rate of tax provides qualifying businesses an opportunity to reduce the tax rate by up to 20% on a significant amount of their income.
Our RINA international tax team can assist you in determining whether your business qualifies for these benefits and will assist you in setting up and managing the IC-DISC, regardless of what state your business operates in.