As a result, USCO needs to determine the appropriate withholding rate on repatriation from its foreign operations by checking any applicable foreign law or treaty. The foreign tax credit protects U.S. taxpayers from double taxation of their income. Generally, the foreign tax credit would allow USCO to subtract the foreign tax from the U.S. tax it would otherwise have paid. The transfer price is the price charged for intercompany transactions, which must satisfy an arm's length standard. Although many are familiar with transfer pricing issues arising from the sale of goods, transfer pricing issues may occur with respect to the use of intangibles, such as software, loans in the form of long-term receivables, and the provision of services.
Every accountant needs to understand the U.S. rules of international taxation.
By understanding these rules, accountants can advise their clients to achieve better results. 6 I.R.C. 901 through 903.