U.S. Adopts Restrictive Interpretation of Nondiscrimination Article of the Philippines Treaty

Article Abstract:

Rev. Rul. 83-144 speaks to the situation where a Philippines corporation formed a pension trust under Philippine law in order to make investments in the United States. The Internal Revenue Service (IRS) ruled that the trust fulfilled all the demands for tax exempt status except it was neither created nor organized in the United States. The IRS further stated that the nondiscrimination clause of the Income Tax Treaty between the United States and Philippines would not foreclose discrimination in this factual case. The nondiscrimination clause of the treaty with the Philippines is analyzed. The applicable section reads to the effect that a permament establishment of a Philippines resident in the United States should not bring about any greater taxes than a United States resident would bear. Practically speaking, probably only foreign trusts meeting United States qualifications will be regarded as trusts under United States qualified plans.

Philippines, Trusts and trustees, Trustees, Trusts (Law)

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Foreign Personal Holding Company Attribution Rules- Proposed Legislative Changes

Article Abstract:

Attribution regulations can be problematic. Section 453 of the Tax Reform Bill of 1983 speaks to altering the regulations for attribution of stock ownership where nonresident aliens and resident family are involved for the purpose of the designation of a foreign personal holding company (FPHC). Revisions are not farsighted enough with respect to discretionary foreign trusts, foreign charities, partners, and unknowing spouses. If five or fewer citizens own fifty per cent or more of the stock value of a corporation, it will be regarded a FPHC. Information reporting requirements of FPHC are analyzed. Sideways attribution may be too broad under current provisions.

Property

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Proposed Legislation to Limit Tax Benefits Available for Property Leased to Foreign Persons

Article Abstract:

There is presently legislation before Congress to limit tax benefits which attach to property leases to tax-exempt interests. This legislation is part of a larger body of revenue increasing bills. It may be passed by the close of 1984. If this legislation is approved, sale-lease back transactions will be cut down. Foreign lessees will be treated as tax-exempt entities. This legislation is expected to impact the finances of leasing to foreigners. Aircraft, vessels, rolling stock, and container leasing will be heavier for lessees. The position of the Treasury Department on this issue of foreign leasing is analyzed.

Finance, Contracts, United States. Congress, Tax exemption, Tax exemptions, Commerce

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