JCSM Shareware Collection 1996 September/JCSM Shareware Collection (JCS Distribution) (September 1996).ISO/bother__/sba954.zip/F236.SBE

Text File | 1995-11-05 | 6KB | 115 lines

@103 CHAP ZZ

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

Many small (and large) American businesses have an unfor-
tunate 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 in-
@IF141xx]volved in exporting.  If you have not already availed your-
@IF141xx]self of its assistance, you should be aware that the U.S.
@IF141xx]government is ready and willing to help you expand your ex-
@IF141xx]ports, with a variety of free services and information.
@IF142xx]Your business currently is not significantly engaged in ex-
@IF142xx]exporting your goods or services abroad.  If you have consi-
@IF142xx]dered trying to sell abroad, but haven't made the effort to
@IF142xx]find out how to go about it, the U.S. government is ready
@IF142xx]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 ink is barely dry on
NAFTA (as expanded in 1993 to include Mexico), and foreign
trade statistics are now showing that Mexico is close to
surpassing Japan as the second biggest customer for U.S.
exports (Japan has been our second largest export market for
many years, after Canada).  NAFTA has only been in effect
since January 1, 1994, so it appears to be working.  (Or it
was, at least, before the Mexican peso collapsed in value
at the end of 1994 and early 1995.)

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 will 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" cor-
poration 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 provis-
ions 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 distrib-
utes the deferred income).

The newer entity, the FSC, allows an exporter to shift in-
come 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 coun-
try.  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 dis-
cussed in more detail below.

@CODE: LS
In @STATE, exporting anything edible is a firing
squad offense.
@CODE:OF