What are the specific methods for avoiding taxation of international profits?
Avoiding taxation of international profits in New Mexico is possible through a variety of methods. The most common is to set up a foreign company in a country with more favorable tax laws, such as the Cayman Islands, and taking advantage of the different regulations. This allows a business to move some of their profits to the foreign company, which pays taxes in the foreign jurisdiction rather than in New Mexico. Another common method is to make use of tax treaties. Many countries have bilateral agreements outlining how and when citizens from other countries can be taxed. These agreements often have special features that can benefit a business, such as reduced tax rates or exemptions for certain types of income. Businesses can also take advantage of offshore banking to reduce their international taxes. By utilizing foreign banks to hold profits, a business can gain access to lower tax rates and possible exemptions. Finally, businesses can make use of tax deferral strategies. One example is to use the deferral rules from the Internal Revenue Code (the IRC), which allows businesses to defer paying taxes on their foreignprofits until they are repatriated and brought back to the United States. Taking advantage of these methods and working with an experienced international tax attorney can help businesses reduce their overall taxation of international profits in New Mexico.
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