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1992-04-30
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@033 CHAP ZZ
┌───────────────────────────────────┐
│ EXPORT SALES INCENTIVES │
└───────────────────────────────────┘
Many small (and large) American businesses have an unfortunate ten-
dency to look at the U.S. as their only market and to ignore the vast
potential markets for their products or services that lie outside the
borders of this country. If you have considered trying to sell
abroad, but haven't made the effort to find out how to go about it,
the U.S. government is ready and willing to help you get started.
For general information on exporting, call the federal government's
interagency Trade Information Center at 1-800-USA-TRADE.
Also, for information on doing business in the "unified" European
Community after it comes together at the end of 1992, call for
written information and a quarterly newsletter, from the Department
of Commerce's SINGLE INTERNAL MARKET: 1992 INFORMATION SERVICE, at
1-202-377-5276. Or call the European Community Center's Washington,
D.C. office, at 1-202-862-9500. For information on taxes and doing
business in specific foreign countries, contact Ernst & Young or
any of the other "Big Six" international CPA firms (the others are
Peat, Marwick; Price, Waterhouse; Coopers & Lybrand; Deloitte &
Touche; and Arthur Andersen & Co.) for their "country guides" on
any country you are interested in. Most major public libraries
will also carry the guides published by one of the Big Six firms.
Over the years, the federal tax law has also been used to provide tax
incentives to U.S. companies that export goods (and in some cases,
services) overseas. Until a few years ago, the main such incentive
was the Domestic International Sales Corporation, or DISC, which was
usually a "paper" corporation set up to receive commissions on export
sales. Roughly half of such commissions received by a DISC could be
retained by it, free of current taxes, thus providing a major tax
deferral. However, since 1985 the DISC provisions have largely been
replaced by a new special entity called a Foreign Sales Corporation, or
FSC, and the small DISCs that still qualify must now pay interest on
the tax deferral they generate (but no tax until the DISC distributes
the deferred income).
The new entity, the FSC, allows an exporter to shift income to an
FSC and have part of it be permanently free of corporate tax, whether
or not distributed as dividends to the parent corporation. However,
the FSC cannot be a "shell corporation" or paper entity, unlike its
predecessor, the DISC, and will often be too complex and expensive to
set up and administer for the small exporter, which is a significant
drawback. Both DISCs and FSCs are subject to quite complex tax rules,
and require a great deal of competent accounting talent and advice to
set up and maintain properly. Each is discussed in more detail below.
@CODE: LS
In @STATE, exporting anything edible is a firing squad offense.
@CODE:OF