22 Jul 2025

Double Take: Unpacking the Branch Profits Tax Trap

The Branch Profits Tax (BPT) under I.R.C. Section 884, is a U.S. federal income tax levied on foreign corporations that conduct business through branches located within the United States. Its purpose is to ensure that these foreign corporations face a tax burden similar to that of U.S.-incorporated subsidiaries owned by foreign entities. The tax is assessed at a 30% rate on the "dividend equivalent amount," which typically refers to the profits of a U.S. branch that are not reinvested into branch assets.

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