Foreign Corporations Operating In The United States

With increasing frequency, Canadian corporations are venturing across the border into the United States to perform services or sell their products. Consequently, we often field questions about the U.S. corporate income tax filing requirements for Canadian corporations generating revenue from our trading partner to the south. This article summarizes some of those requirements.

The general rule

The instructions for the U.S. corporate income tax return for foreign corporations (Form 1120-F) state:

“… a foreign corporation must file Form 1120-F if, during the tax year, the corporation was engaged in a trade or business in the United States, whether or not it had U.S. source income from that trade or business, and whether or not income from such trade or business is exempt from United States tax under a tax treaty…”