Friday, July 1, 2011

JCT Document “Present Law And Background Related To U.S. Activities Of Foreign Persons”

The Joint Committee on Taxation (JCT) has published a document entitled “Present Law and Background Related to U.S. Activities of Foreign Persons.” (JCX-37-11) According to JCT, in 2009, foreign persons received approximately $488 billion in income from U.S. investments. Of that amount, $151 billion was from foreign direct investment in the U.S. “With significant exceptions, foreign persons' income from foreign investment in the U.S. is subject to U.S. tax,” JCT noted. The document contains in-depth discussions of source of income rules, gross-basis taxation of U.S.-source income (types of income subject to gross-basis taxation; data on income subject to withholding; reduced and zero rates of withholding under tax treaties; and imposition of gross-basis tax and reporting by U.S. withholding agents), net-basis taxation, and special rules (branch taxes; the Foreign Investment in Real Property Tax Act of 1980; and earnings stripping). JCX-37-11 is located at

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