What is a Foreign Company

Foreign company” means any company or body corporate incorporated outside India which,— (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and,

 (b) conducts any business activity in India in any other manner.

For U.S. federal tax purposes, where “foreign corporation” means a corporation that is not created or organized in the United States.[4] For tax purposes, the Internal Revenue Service (IRS) treats all domestic companies in the same manner for tax purposes, without regard to where they were originally formed or organized within the United States, but applies different rules to companies that are formed or organized outside of the US.

States need to know who is conducting business in the state for public safety and interest, tax and other considerations. Consequently, all states require companies “transacting business” within their borders to register with the state. Such a registration is called a “foreign registration,” and such a company becomes a “foreign corporation” within such a state.

What it means to be “transacting business” varies from state to state, according to each state’s specific rules and regulations. For example, California may require a corporations to register based upon the compensation it pays to residents of the state, even if its revenues are generated outside of the state.

Many public corporations in the United States are registered in the State of Delaware (because of more favorable corporate governance regulations), or registered in Nevada (because of more favorable tax provisions and corporate officer liability protection) and then are registered as foreign corporations in all the other states that they do business in.

 Thus the corporation is a domestic corporation in Delaware or Nevada, and is a foreign corporation in any other state (or country) with which it registers.

While there may be tax benefits as a result of choosing where a corporation’s domestic jurisdiction is located, registering as a foreign corporation in another state can create new tax liabilities. For example, Nevada, Texas and Wyoming have no state income tax.

While Delaware does not have income tax, it does have a substantial corporate privilege tax. If the company is taxed as a pass-through entity, it may be required to file a partnership return in the state  that it has filed a foreign corporation.

If the company is taxed as a C-Corporation, then it may have to pay income taxes to the state  it has filed a foreign corporation, in proportion to the income generated in each state. US Tax Law is complicated all by itself, and adding foreign registrations to an existing company adds to the complication.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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