Category : Financial and Statistics
Archive   : SBADV934.ZIP
Filename : F236.SBE

@033 CHAP ZZ

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³ EXPORT SALES INCENTIVES ³
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Many small (and large) American businesses have an unfor-
tunate tendency to look at the U.S. as their only market
and to ignore the vast potential markets for their products
or services that lie outside the borders of this country.

PLANNING NOTE FOR @NAME:
-----------------------------------------------------------
@IF141xx]Your firm is engaged already in the export business, so you
@IF141xx]probably already have considerable knowledge of what is in-
@IF141xx]volved in exporting. If you have not already availed your-
@IF141xx]self of its assistance, you should be aware that the U.S.
@IF141xx]government is ready and willing to help you expand your ex-
@IF141xx]ports, with a variety of free services and information.
@IF142xx]Your business currently is not significantly engaged in ex-
@IF142xx]exporting your goods or services abroad. If you have consi-
@IF142xx]dered trying to sell abroad, but haven't made the effort to
@IF142xx]find out how to go about it, the U.S. government is ready
@IF142xx]and willing to help you get started.
-----------------------------------------------------------

For general information on exporting, call the federal
government's interagency Trade Information Center at:

1-800-USA-TRADE

Also, for information on doing business in the "unified"
European Community after it comes together (if ever) in
1993, call for written information and a quarterly news-
letter, from the Department of Commerce's SINGLE INTERNAL
MARKET: 1992 INFORMATION SERVICE, at 1-202-377-5276. Or
call the European Community Center's Washington, D.C. of-
fice, at 1-202-862-9500. For information on taxes and do-
ing business in specific foreign countries, contact Ernst
& Young or any of the other "Big Six" international CPA
firms (the others are Peat, Marwick; Price, Waterhouse;
Coopers & Lybrand; Deloitte & Touche; and Arthur Andersen
& Co.) for their "country guides" on any country you are
interested in. Most major public libraries will also carry
the guides published by one of the Big Six firms.

Over the years, the federal tax law has also been used to
provide tax incentives to U.S. companies that export goods
(and in some cases, services) overseas. Until a few years
ago, the main such incentive was the Domestic International
Sales Corporation, or DISC, which was usually a "paper" cor-
poration set up to receive commissions on export sales.
Roughly half of such commissions received by a DISC could
be retained by it, free of current taxes, thus providing a
major tax deferral. However, since 1985 the DISC provis-
ions have largely been replaced by a new special entity
called a "Foreign Sales Corporation," or FSC, and the small
DISCs that still qualify must now pay interest on the tax
deferral they generate (but no tax until the DISC distrib-
utes the deferred income).

The new entity, the FSC, allows an exporter to shift income
to an FSC and have part of it be permanently free of corpor-
ate tax, whether or not distributed as dividends to the par-
ent corporation. However, the FSC cannot be a "shell
corporation" or paper entity, unlike its predecessor, the
DISC, and will often be too complex and expensive to set
up and administer for the small exporter, which is a sig-
nificant drawback. Both DISCs and FSCs are subject to
quite complex tax rules, and require a great deal of com-
petent accounting talent and advice to set up and maintain
properly. Each is discussed in more detail below.

@CODE: LS
In @STATE, exporting anything edible is a firing
squad offense.
@CODE:OF