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Subject:  Tax on offshore companies Date:  9/29/2003  7:08 PM
Author:  markdonnell Number:  67005 of 130751


I'm looking for some quick info on the tax treatment of offshore companies investing in US equities.

I'm not a resident in the US (I live in New Zealand) and I'm looking to open a new brokerage account in the US so that I can simplify trading in US shares. As a non-resident my options are that I can open an account as an individual or through a company.

I know that if I open the account as an individual, as a "non-resident alien", then I will be hit with US taxes on any dividend income, but I don't get hit for any capital gains tax. And since there's no capital gains tax in New Zealand I'm home free on any share appreciation :-)

Question is ... if I invest through a New Zealand-based company then what is the tax treatment of any capital gains? As a "non-resident company" would my investments be liable for US capital gains taxes? I'm not worried about tax on any dividends, since the dividends are so small. But if the company would be hit with US capital gains taxes that'd be a bit of a disincentive.

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