Corporate Income Tax Rate                                     (%)21(a)

Corporate Capital Gains Tax Rate                           (%)21 

Branch Tax Rate                                                         (%)21(a)

Withholding Tax                                                         (%) (b)  

Dividends                                                                    30(c)

Interest                                                                        30(c)(d)

Royalties from Patents, Know-how, etc.               30(c)

Branch Remittance Tax                                           30(e)

Net Operating Losses                                             (Years)  

Carryback                                                                  0(f)

Carryforward                                                             Unlimited(f)

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(a)The 21% rate is effective for tax years beginning after 31 December 2017. In addition, many states levy income or capital-based taxes. A base erosion minimum tax is also imposed on corporations. See Section B.

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(b)Rates may be reduced by treaty.

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(c)Applicable to payments to non-US corporations and nonresidents.

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(d)Interest on certain “portfolio debt” obligations issued after 18 July 1984 and non-effectively connected bank deposit interest are exempt from withholding tax.

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(e)This is the branch profits tax applicable to non-US corporations (see Section D).

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(f)A net operating loss deduction is generally limited to 80% of taxable income. Special rules apply to certain types of losses and entities. For details, see Section C.

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TAXES ON CORPORATE INCOME AND GAINS

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Corporate income tax. US corporations are subject to US federal taxation on their worldwide income, including income of foreign branches and certain income of their foreign subsidiaries (regardless of whether such income is repatriated to the United States in the year in which it is earned). If certain conditions are met, a US corporation is allowed a 100% deduction against the foreign-source portion of dividends received from certain foreign subsidiaries, including any gain from the sale or exchange of stock in a foreign subsidiary that is treated as a dividend under Section 1248 of the Internal Revenue Code (IRC).

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In general, foreign corporations are subject to US taxation on income that is effectively connected with a US trade or business and on certain other US-source income. However, if the foreign corporation is resident in a country having an income tax treaty with the United States and is eligible to claim the benefits of that treaty, only the foreign corporation’s business profits that are attributable to a permanent establishment in the United States are subject to US taxation and the rate of tax on certain other US-source income may be reduced.

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Rates of corporate tax. For tax years beginning after 31 December 2017, a corporation’s taxable income is taxed at 21%. This rate applies both to US corporations and to the income of foreign corporations that is effectively connected with a US trade or business. Special rules under Section 15 of the IRC apply to US corporations with certain fiscal tax years to account for the corporate rate change.

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Base erosion and anti-abuse tax. The base erosion and anti-abuse tax (BEAT) is a minimum tax on corporations that are subject to US corporate income tax and that meets certain gross receipts and base erosion percentage thresholds. The BEAT amount is the excess, if any, of an amount equal to a 10% (5% for tax years beginning in the 2018 calendar year and 12.5% for tax years beginning after 31 December 2025) of modified taxable income (MTI) over an amount equal to the regular tax liability of the taxpayer reduced by certain credits (including the foreign tax credit). In general, MTI means taxable income calculated without regard to any base erosion tax benefits (for example, current expenses or cost-recovery deductions) generated from base erosion payments and the base erosion percentage of certain net operating loss deductions. Base erosion payments include most deductible payments to foreign related persons, including payments for services, for the use of property and for depreciable or amortizable property. Base erosion payments generally do not include costs of goods sold, with exceptions.

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Capital gains and losses. A corporation’s gains are taxed at the same rates as ordinary income. In general, capital losses may offset only capital gains, not ordinary income. Subject to certain restrictions, a corporation’s excess capital loss may be carried back three years and forward five years to offset capital gains in such other years.

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Administration. The annual tax return for domestic corporations is due by the 15th day of the third month after the close of the company’s tax year for tax years beginning before 2016, and by the 15th day of the fourth month after the close of the company’s tax year for tax years beginning after 2015. A corporation is entitled, upon request, to an automatic six-month extension to file its return. In general, 100% of a corporation’s tax liability must be paid through quarterly estimated tax installments during the year in which the income is earned. The estimated tax payments are due on the 15th day of the 4th, 6th, 9th and 12th months of the company’s fiscal year.

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Credit for foreign taxes. A credit is allowed for foreign income taxes paid, or deemed paid, by US corporations, but the credit is generally limited to the amount of US tax incurred on the foreign-source portion of a company’s worldwide taxable income. Separate limitations must also be calculated for passive income, “general” category income, foreign branch income, global intangible low-taxed income (GILTI; see Section C) and income resourced under a treaty.

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The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

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This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.