The US Treasury Department and the Internal Revenue Service (IRS) are requesting comments concerning regulations TD 8223 (Branch Tax), TD 8432 (Branch Profits Tax) and TD 8657 (Regulations on Effectively Connected Income and the Branch Profits Tax).
Under section 884 of the US Internal Revenue Code (IRC), foreign corporations conducting a trade or business in the United States are subject to the US branch profits tax. The branch profits tax is imposed at 30% on the dividend equivalent amount (DEA) of the branch in the US. The DEA is computed as the profits effectively connected to the branch, as adjusted for any changes in the US net equity of the branch during the period. A lower rate of branch profits tax may be provided by a US income tax treaty. The branch profits tax applies in addition to regular US corporate income tax.
