Every day, the global economy is getting more and more connected. International tax laws are impacted by ever-changing domestic policies, geopolitical events, and shifting market conditions. Tax professionals who work for global organizations need a deep understanding of these complex regulations to ensure compliance and manage the financial health of businesses.
Additionally, the modern global economy allows individuals to expand their professional horizons to positions outside of the U.S. These citizens may still have a tax responsibility in the U.S., however. To ensure they remain compliant with U.S. tax law―especially when moving assets between jurisdictions―Americans living abroad can benefit from the advice and guidance of knowledgeable tax professionals.
Students enrolled in Northeastern’s Online Master’s in Taxation program who want to pursue positions in a corporate setting can choose to focus their degree on the taxation of entities track. Within this track, students can deepen their knowledge of international taxation through two courses taught by established tax professionals.
ACCT 6240 – International Taxation: Inbound Transactions
This course addresses the taxation of foreign individuals or corporations receiving income from sources, or conducting business, in the the U.S. Students discuss topics such as the sourcing of income, taxation of passive income, taxation of income connected to a U.S. trade or business, branch-level taxes, issues of foreign-owned U.S. corporations, income tax treaties, and transfer pricing.
The tax challenges that arise from investing in the U.S. can be many. For instance, it may be beneficial for some organizations to keep their assets in the U.S., while others might benefit from moving assets to another jurisdiction. Often, these issues appear when an entity does not consider the tax treaties established between its home country and the U.S.
One of the most common mistakes foreigners make when investing in the U.S. is forgetting to make relevant treaty claims. Currently, the U.S. has nearly 70 active tax treaties with countries across the globe, which means a large number of foreigners can benefit from these agreements.
For example, Canadian citizens who do work for U.S. businesses or make investments in U.S.-based organizations can reduce their risk of double taxation by making a claim on the U.S.-Canada tax treaty. Taxpayers who do not make a timely claim could miss their chance to reduce or eliminate their responsibility regarding international taxes.
Too often, citizens of foreign countries mistakenly believe their home governments cannot find out about their U.S. income. Not only can failing to report income earned in the U.S. lead to legal trouble back home, but tax dodgers may also be subject to U.S. penalties. Foreign companies and individuals therefore require trusted tax advisors to ensure they gain the maximum benefit from all available tax treaties.
Beyond treaties, foreign investors may also struggle to decide if it is better to keep their retirement savings in the U.S. or move them. For some investors, the options available in the U.S. may carry many more benefits than those available in their home countries. In this case, an international tax professional can provide guidance on how best to utilize retirement assets to avoid excessive tax payments.
ACCT 6241 – International Taxation: Outbound Transactions
This course examines the federal taxation of U.S. individuals receiving income from sources or conducting business in foreign jurisdictions. Throughout the course, students gain insights into topics such as sourcing of income, allocation and apportionment of deductions, foreign tax credits, taxation of U.S. citizens and residents abroad, controlled federal corporations, passive foreign investment companies, foreign currency translations and transactions, and special entities.
One of the biggest tax stories in recent years involves the taxation of individuals and businesses who own at least 10 percent of stock in a foreign corporation. The Tax Cuts and Jobs Act of 2017 introduced section 965 to the U.S. tax code, which requires U.S. shareholders to pay a transition tax on any untaxed foreign earnings.
The new law sets unique standards for individuals and businesses. For example, corporations are subject to a 15.5 percent tax on accumulated earnings and profits as well as an 8 percent tax on non-cash assets. Individuals in the highest tax bracket are required to pay a 17.5 percent tax on cash assets and a 9.1 percent tax on non-cash assets.
As this is a relatively new law, many organizations are still working to comply with this tax, as well as other regulations introduced in recent reforms. These organizations require knowledgeable tax professionals who possess a deep understanding of the intricacies involved with foreign holdings.
Pursuing Graduate-Level Education
If you are a tax professional who is looking to make the move to an advanced position in a global organization, you’ll need the knowledge and skills to conduct research, assess company investment structures, and develop strategies for improving the organization’s financial standing.
Tax professionals are also needed to assist the estimated 9 million non-military Americans who live abroad. Whether someone relocated to another country for work or retirement, he or she will have unique tax considerations that aren’t easy for a layperson to manage. With the help of a knowledgeable tax professional, Americans living abroad can ensure they meet all compliance expectations and maximize their ability to utilize their earned income.
At the D’Amore-McKim School of Business at Northeastern University, you’ll have the opportunity to gain an in-depth understanding of international tax law through the Online MST program. Learn more about the courses offered for the fully online program here.