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Summer 2003 Edition- June 2003 Volume 2

Tax Burdens May Exist Tax Burdens May Exist

Q : Our company has begun to sell its products in the US. Should we be con-cerned about paying taxes?

A: There are two types of (US) taxes you should be concerned about: income taxes, which are paid by a company to State and Federal offi-cials, and secondly, sales taxes, which are collected by companies, and re-mitted to the state( s).

Corporate income taxes are gen-erally not payable if your company has no "presence" in the US (i. e.: employees at a physical location). In recent years, however, a number of states have become considerably more aggressive when deciding whether or not a foreign company has a "pres- ence" in their state, sufficient to jus-tify corporate income taxes.

Because each state's laws are somewhat different, you would be well advised to consult a CPA (char-tered professional accountant) who in fairly quick fashion can advise you as to your obligations (no tax liability, information returns only, or taxes are owed).

With respect to the collection and remittance of sales taxes, it is gener-ally true that if you are selling a prod-uct to the end user and the product is NOT used in manufacturing then sales taxes must be collected and remitted to the relevant state( s).

Again, a determination should be made as to your company's "pres- ence" in the particular state, as this will impact upon your obligations with respect to sales taxes.

In no event, should a company with sales in the US or even a mini-mal presence (a sales representative who make calls in the US) ignore the possibility that a (US) tax burden may exist. Seek professional assist-ance and verify what, if any, tax bur-den you may have.

Mark L. Barie is founder and presi-dent of Crossborder Development Corporation, a consulting firm to foreign companies who want to do business in the U. S. Mr. Barie can be reached at


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