U.S. TAX ISSUES AFFECTING NON-U.S. PERSONS

A non U.S. business or individual who undertakes business activity (or who makes investments) in the United States must consider tax issues both in the U.S. and in his home country. U.S. and home country tax advisors should work in tandem in developing the best format for such investments. Following is a partial list of some of the principles and issues that such persons should be aware of:

• The generally applicable tax laws in the U.S. may differ greatly from those in your home country.



• State and local tax laws must be considered along with federal tax laws.



• Many passive kinds of income (interest, dividends, rents) are subject to a withholding tax.



• The U.S. (and its states) have special rules applying to investments in real estate.



• An individual or company involved in an active business in the U.S. must file tax returns.



• For that purpose, an individual or company that is a partner in a U.S. partnership or a member of a U.S. “limited liability company” is treated as conducting an active business and must file a personal or corporate tax return.



• Your home country may provide a tax credit for federal (but not state) taxes paid in the U.S.



• Tax treaties between the U.S. and other countries may assure such a credit, reduce withholding tax rates or contain other significant terms.



• U.S. estate and gift taxes apply when foreign persons transfer certain U.S. located assets. These rules are not the same as gift and estate tax rules for U.S. persons.



• Individuals will be treated as U.S. residents for income tax purposes if they are issued a permanent resident visa (“green card”) or, generally, if they meet a mathematical test for days of presence in the U.S. (which is met by 183 days and can be met by as little as 122 days each year).



• The U.S. may adjust your intercompany charges (such as for purchases of inventory or other items).



• State income tax may ignore separate-company accounting and allocate worldwide income of all affiliated companies.

The tax issues that may arise will depend on the precise circumstances of your business or investment. Accordingly, various other issues may arise in your particular case.