The major casualty of the current political battle appears to be
the preferential 15% rate of tax on dividends. For most exporters
who have taken advantage of IC-DISCs over the last few years, the
benefit derived from that 15% rate will end on December 31, 2012.
Two issues arise with respect to the end of the 15% rate:
- How can you ensure the maximum benefit by December 31,
2012?
- What should we do with the IC-DISC as of January 1, 2013?
First, we recommend that you pay the maximum commission possible
to the IC-DISC with a corresponding cash distribution to its
shareholders by December 31, 2012. Doing so will maximize your
dividends taxed at the 15% rate. If you cannot determine the
commission with precision by December 31, 2012, we recommend that
you estimate and, in fact, overestimate the commission. We are
preparing documentation for companies to ensure that their
overestimation does not result in disqualification of IC-DISC
status. Contact us if you are
