VISIO Corp (VSIO): Big ISO 9000 Play Message Board

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Technology Stocks : VISIO Corp (VSIO): Big ISO 9000 Play

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To: Grommit who wrote (251)	11/3/1998 2:57:00 AM
From: Harry Franks	Read Replies (2) of 522

<<My understanding from one grad business school tax class is that US tax law is such that US corporations get a tax credit for foreign taxes paid. So if a foreign nation charges a lower tax rate, then they pay higher US taxes. >> What you are referring to is "subpart F" in tax terms. It means that certain types of foreign income (generally passive income) is taxed currently at the US rates (with a tax credit). But, take Dell for instance, when it opens a factory in Ireland (12% tax rate or thereabouts), that income does not fall into this "subpart F" exception and the income earned in Ireland is not currently taxed at the higher US rates. It will be taxed at the US rate only upon repatriation (i.e. through a dividend). Under US accounting rules, you don't have to "book" the higher US rate if you can convince your auditors that you have no intention of repatriating the income. Most companies will keep this low taxed income off-shore to finance further international expansion. Assuming continued growth this is the correct answer. Sorry this is technical. Regards, Harry

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