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Overseas Investments

The recent economic downturn has decreased the amount of money that countries are investing in other countries, or Foreign Direct Investment.  One of the countries no longer affected by this change is China, as the amount of FDI is quite significant at almost $100 billion according to the Ministry of Commerce.  The risk they face is minimized by the high demand for Chinese products.  However, according to current press on foreign relations with China, US investors may be faced with national favoritism by the government when doing business in China, since local businesses may not be regulated as much as some foreign businesses are.

Do you have questions or concerns regarding an overseas investment?  Contact a local financial planner in your area to minimize any business loss and maximize your business opportunities.

FDI is a measure of ownership of assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. Companies or Individuals may consider Foreign Direct Investment by starting a company in another country, buying a foreign company, or through a joint venture, merger, or acquisition. The following are some of the issues associated with overseas investments:

  • Overseas Investment Act of 2005
  • Foreign Direct Investment
  • Portfolio Management
  • Risks
  • Taxation
  • International Finance
The IRS taxes the income or capital gains from most foreign investments. Taxes are applied as gains are made, or they are applied when an investment is realized. Although US citizens may still choose to set up offshore trusts, they are thought of by legislation to be similar to an investment configuration and should not be double taxed. Many investors claim gain as passive income, so that the gains from high yielding international investments can be taxed on the same basis as domestic investments and avoid double taxation. This usually means having an LLC or LLP, which is usually un-taxed separately in the US, as it transfers over to the owner’s personal income taxes.

When doing business internationally, an important part to monitor is the current exchange rate, which is the rate between two currencies by which one will be exchanged for the other.   Exchange rate differences will create a separate gain or loss just for trading the necessary currency in order to do business with other countries.

Find out more information about international investments by contacting a finance professional. Find local financial planner in your area.