What are the administrative price rules?
The rules for administrative prices are used to determine the income of a foreign sales company (FSC). This type of corporation is created to reduce income tax related to export income tax. The categories of export activities that qualify for income tax are harassment, negotiation and contractual contracts.
by up to a 15 % income tax reduction and up to 30 % of the income tax reduction is possible according to the rules for administrative prices. When the company sells products or services in the country outside the original origin, it is considered an exporter. The taxable income generated from these sales is modified if export transactions are carried out by a foreign sales company. FSC is sometimes formed by export business companies that are groups that specialize in the sale and transfer of foreign goods. The act of FSC on their own name with dirvazby on the parent company or could function separately as an authorized agent for external corporation.
To meet the requirementY formations FSC, the integrated entity should maintain its headquarters in a qualified foreign country. It should have at least one director who is not a permanent resident of the country of origin of the parent manufacturer, will not have more than 25 shareholders, issue only ordinary shares and maintain a separate set of accounting records at its headquarters.
Other FSC requirements in the Structure of Rules for Administrative Prices include maintenance of the main bank account, located outside the country of origin of the parent manufacturer. The meeting of all shareholders and directors should take place outside the country of origin. Any dividends of shares, legal fees and salaries must be paid to a foreign bank account.
Under the administrative rules of prices, export activities must meet certain requirements in order to be able to exemption from income tax. While activities occur in a foreign nation in which the goods are balanced, only one activity must become, abY has qualified for liberation. Any request other than advertising is one of the qualified categories of export activities. Hrashing may include press releases in one of the local newspapers or direct sales.
Other categories of export activities that meet the qualification of income tax tax are negotiating and contracting contracts. In addition to participating in some business activities, a specific percentage of transaction costs should be of direct foreign costs. Within the rules for administrative prices, direct foreign costs are considered to be 50 percent or more of the total direct costs associated with five qualifying export activities or 85 percent of the total direct costs incurred from two export activities such as shipping delivery.