Foreign Corporation

[ACS41]

Client is not a United States Citizen or resident. He formed a corporation in Trinidad and registered it as a foreign corporation with the Florida Secretary of State. All income and expenses from this corporation will be United States source income and expense. The bank account is in Florida and the office address is his brothers house (an officer).

My understanding is that the corporation is subject to a 30% “branch tax.” Is this a flat tax, or there something we can do to reduce it?

When the client takes money out does he treat it as a dividend and file a 1040NR? Is this dividend subject to backup withholding?

Payroll; Can this be an issue. He cannot pay himself a salary since he is not eligible to work in this country.

It seems to me since all the income and expense are United States based it seems more straight forward to establish a corporation in the United States with a foreign shareholder and pay tax the on the corporate profits and the shareholder dividends. It looks like a 5472 needs to be filed.

I will greatly appreciate if someone who has some experience in foreign corporations can provide some input.

Thank you.