The US Treasury Department and the Internal Revenue Service on Tuesday issued fresh guidance relating to the determination of the applicable tax treaty in cases where a foreign corporation is resident in two foreign countries.
According to the revenue ruling, a foreign corporation will be treated as a resident for US tax treaty purposes only of the country to which residence has been assigned under the tax treaty between the two foreign countries.
Accordingly, the foreign corporation will not be entitled to claim the benefits of the tax treaty between the United States and the country to which residence is not assigned under the treaty between the two foreign countries.
However, the foreign corporation will be entitled to claim the benefits of the tax treaty between the United States and the country to which residence is assigned, provided that it satisfies any limitation on benefits provision and other applicable requirements of the treaty.
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