Navigating US tax issues for Japanese company delivers multiple benefits
RSM secures $200,000 in investment incentives, improves compliance
An international dental company, owned by a Japanese holding company, has a North American entity headquartered in South Bend, Indiana. The Japanese owner wished to increase investment in the Indiana facility and needed assistance navigating the international and U.S. tax requirements, with an emphasis on inbound foreign investment in Indiana. They turned to RSM for a global approach.
The Japanese parent company wished to negotiate an agreement with stateside economic development agencies to support its direct foreign investment. Further, the company wanted to improve sales tax compliance efficiency for its U.S. operations and evaluate their international tax profile, with specific attention to transfer pricing.
RSM assembled a team of international and state and local tax professionals to assist the parent company with the tax and incentive considerations of its investment in Indiana, as well as its overall sales tax concerns throughout the United States. Over the course of 18 months, our team established an understanding of the business and tax goals of both the Japanese corporation and its Indiana-based company and prepared a plan to improve their global tax profile. Specifically, we:
- Conducted a transfer pricing analysis to determine the price of goods sold between the Japanese parent company and its other legal entities within the domestic corporation
- Identified prior miscalculation of Indiana manufacturing and research and development exemptions and secured Indiana sales tax refunds
- Worked with the local economic development groups to secure property tax abatements related to the parent company’s investment in new digital dentistry equipment
- Established an agreement for training grants and cash rebates tied to the company’s plans to hire 20 new staff members by 2017
By working closely with the Japanese owners and the Indiana leaders, the RSM team understood the full impact of the upcoming investment in the U.S. business. Our credits and incentives specialists were able to articulate the value of this investment to the community leaders and secure more than $200,000 in tax incentives and training grants. A new U.S. sales tax compliance model, fully outsourced to RSM’s sales tax center of excellence, will improve the efficiency and accuracy of overall compliance. Working together, our sales tax, credits and incentives, and international tax professionals have provided a seamless global service team that is improving the company’s confidence in its international business operations.