Branch Profits Taxes

Summary

This practice note discusses the complexities of the U.S. branch profits tax (BPT). The BPT is a U.S. federal income tax levied on foreign corporations that conduct business through branches within the country. 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.