Software of the Month Club 1997 March/Software of the Month Club 1997 March.iso/pc/dos/lg/sba/f236.sbe

Text File | 1996-08-23 | 5.4 KB | 117 lines

@103 CHAP ZZ

              ┌───────────────────────────────────┐
              │      EXPORT SALES INCENTIVES      │
              └───────────────────────────────────┘

Many small (and large) American businesses have often had
an unfortunate tendency 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.

PLANNING NOTE FOR @NAME:
-----------------------------------------------------------
@IF141xx]Your firm is engaged already in the export business, so you
@IF141xx]probably already have considerable knowledge of what is
@IF141xx]involved in exporting.  If you have not already availed
@IF141xx]yourself of its assistance, you should be aware that the U.S.
@IF141xx]government is ready and willing to help you expand your
@IF141xx]exports, with a variety of free services and information.
@IF142xx]Your business currently is not significantly engaged in
@IF142xx]exporting your goods or services abroad.  If you have been
@IF142xx]considering trying to sell abroad, but haven't made the
@IF142xx]effort to find out how to go about it, the U.S. government
@IF142xx]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

Ask for a desk officer who specialized in your particular
industry, or, for service businesses, call the Office of
Service Industries at [phone].

Consider exporting to Mexico or Canada, now that NAFTA (the
North American Free Trade Agreement) is in effect between
the U.S. and those two countries.  The NAFTA treaty, which
was expanded as of January 1, 1994 to include Mexico, has
gotten off to a somewhat slow start, due to the collapse
of the Mexican peso after the 1994 Mexican presidential
election.  However, even with the extreme financial problems
Mexico is still encountering, many foreign trade experts
expect that U.S. trade with Mexico will soon surpass that
with Japan, as the second biggest customer for U.S. exports
(Japan has been our second largest export market for many
years, after Canada).

To take advantage of NAFTA, you should be aware that reduced
NAFTA tariff rates only apply to North American products,
and at present, about half of goods being exported from the
U.S. to Mexico are duty free.  By around 2004, 98 percent
will be, and by the year 2009, all Mexican tariffs on U.S.
goods are to be eliminated, under the treaty.

If you want to know whether your products qualify as
duty-free exports under NAFTA, you need to obtain the HS
number (i.e., the Harmonized Commodity Description and
Coding System number) that applies to your products.  To
find the applicable code, call the U.S. Census Bureau's
Foreign Trade Division, telephone number [phone].
Also, for information on exporting to Mexico under NAFTA,
call the U.S. Department of Commerce's automated phone
system at [phone].  You can get a list of over 50
free documents faxed to you, many having to do with
marketing and preparing products for export to Mexico.

Finally, you may need more help regarding product-content
rules of origin requirements.  For assistance in completing
the necessary NAFTA certificates of origin, call the
Department of Commerce's Office of Mexico -- [phone].

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
KMPG 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 newer 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, but must have some actual presence in a foreign country.
Due to such "substance" requirements, a FSC will often be
too complex and expensive for the small exporter to set up
and administer, 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