Foreign Recipients of U.S. Income, and Tax Withheld, 1984 · Foreign Recipients of U.S. Income, and Tax Withheld, 1984 By Margaret P. Lewis* U.S. source income paid to foreign persons

Foreign Recipients of U.S. Income,and Tax Withheld, 1984

By Margaret P. Lewis*

U.S. source income paid to foreign persons(including foreign individuals, corporationsand other organizations) rose 57 percent in1984 to a record $17.1 billion. Tax withheldon this income rose to $970 million, an in-crease of just 39 percent (since nearly two-thirds of the additional income was exempt fromtax withholding).

Income paid to residents of the UnitedKingdom (U.K.) rose by $1.1 billion, an in-crease of 55 percentage points, accounting foralmost 20 percent of the total increase. U.K.residents received $3.1 billion of U.S. sourceincome in 1984, surpassing the NetherlandsAntilles ($2.8 billion) which had an increaseof 34 percentage points from 1983.

Almost 70 percent of the increase in U.S.source income paid to foreign persons was ac-counted for by interest payments. The DeficitReduction Act of 1984, which became effectiveon July 18, 1984, exempted most types of inter-est payments to foreigners from U.S. tax with-holding. Not all of this increase can be at-tributed to the enactment of this legislation,however, since only interest paid on obliga-tions issued after July 18, 1984, was entitledto this exemption. During 1984 high U.S. in-terest rates helped make investment in theUnited States more attractive to foreign in-vestors who thus helped finance an expandingU.S. economy. The growing U.S. economy alsoattracted foreign investment as the dollar ap-preciated against major currencies. Moreover,the large U.S. trade deficits put "strong dol-lars" into the hands of foreigners who in turninvested them in the United States.

BACKGROUND INFORMATION

A U.S. individual or organization paying in-come to a foreign individual (who, for tax pur-poses, is not a resident or citizen of theUnited States), corporation, or other organiza-tion (that is not incorporated in the UnitedStates) reports this income and the U.S. taxwithheld on Form 1042S, Income Subject to With-holding Under Chapter 3, Internal Revenue Code

(this title changed, in 1985, to Foreign Per-sons' U.S. Source Income Subject to Withhold-ing). While the basic tax rate is 30 percent,certain types of income are taxed at differentrates. Income paid to countries that have en-tered i nto tax treaty agreements with theUnited States is usually taxed at lower rates.The tax withheld represents final payment ofthe actual tax liability in most instances.The responsibility for withholding tax belongsto the payer or the representative (usually afinancial institution) of the payer rather thanthe recipient of the income. Income connectedwith the recipient's U.S. trade or business isexempt from withholding. The United Statestaxes this income separately, as though it werereceived by a U.S. citizen or corporation.

The basic tax rate on U.S. source income (30percent) differs from the graduated tax ratesfor U.S. individuals and corporations becauseforeign individuals and corporations may re-ceive income from an indefinite number ofsources. Since most foreign persons are notrequired to file U.S. income tax returns andconsolidate all U.S. income, their total incomecannot be taxed in graduated "brackets," as onepayer would have no knowledge of the amount ofincome other individuals and organizations hadpaid to the same foreign person.

RECENT LEGISLATION AND ITS IMPACT

The Deficit Reduction Act of 1984, as men-tioned above, went into effect on July 18,1984. The Act exempted from tax most types ofinterest payments, mainly portfolio interest,made to foreign persons [1]. The principal ex-ception to this exemption was interest paid toa foreign individual, bank or corporation thatowned at least 10 percent of the voting powerof the U.S. payer. The removal of withholdingtax on most types of interest is expected toincrease direct foreign investment in theUnited States and to curtail U.S. borrowingthrough financial affiliates and other corpora-tions in the Netherlands Antilles (and othertax.havens, which are discussed below) [2]..

*Foreign Returns Analysis Section. Prepared under the direction ofJames Hobbs, Chief. 61

62. Foreign Recipients of U.S. Income, 1984

U.S. bond holdings by foreigners increased by85 percent to $32.3 billion in 1984 due in partto the 1984 Act. Most of these issues were di-rect U.S. corporate Eurobond placements [3].Borrowing from financial affiliates in theNetherlands Antilles, however, remained strongin the first three quarters of 1984 but

*almost

ceased in the fourth quarter with the-advent ofthe new law [4].

Tax treaty benefits that had been extendedunder the U.S.-U.K. treaty to British "terri-tories" and former "territories" were cancelledas of January 'l, 1984 [5]. As a result, taxwithheld on payments to these "territories"rose by 22 percent, while income paid remainedvirtually unchanged from 1983. The effectivetax rate (tax withheld as a percent of totalincome) for these "territories" rose from 16percent to 19 percent.

As of 1986, only one of the "territories"signed a separate treaty* agreement with theUnited States [6]. Many of the U.K. "terri-tories" are generally considered to be taxhavens, to some extent. Therefore, they may bereluctant to enter into' agreements with theUnited States which would work against thosevery characteristics -that make these "terri-

--tor tax avens (see the discussion of taxtreaty countries later in this article).

Also cancelled in 1984, were benefits for-merly extended under the U.~.-Belgium treaty toformer Belgian territories [7]. While both in-come and tax withheld of these countries 'de-clined by more than half, the percentage of in-come exempt from withholding more than dou-bled. This caused the effective tax rate forthese three countries combined to decline from14.4 percent to 9.6 percent.

The Social Security Amendment Act of 1983 re-quired withholding on benefits paid to foreignpersons beginning in 1984. At the same time, arevision was made to the Railroad RetirementAct of 1931 to require withholding on certainpayments to foreigners. The first completedata on these payments will be available forCalendar Year 1985.

DATA HIGHLIGHTS AND TRENDS

As previously mentioned, U.S. income paymentsto foreigners totalled $17.1 billion in 1984,increasing by 57 percent. The increase in1983, in contrast, was only 4 percent. Between1983 and 1984, income subject to withholdingrose by 39 percent, while exempt income in-creased by 71 percent. The greater rise.in ex-empt income was reflected in a comparativelysmall increase in tax withheld of 39 percent.

The average income payment rose by 21 percentto nearly $22,000, as indicated by a 57 percentincrease in income paid with only a 29 percentincrease in the number of Forms '1042S filed.The average amount of tax withheld per paymentrose by only 8 percent (due to the large in-crease in exempt payments mentioned above) to$1,200. The average effective tax rate (taxwithheld as a percent of total income for allcountries) for 1984 was 5.7 percent.

Type of Income

Interest as a percent of total income paidcontinued to rise in 1984. Interest accountedfor 59 percent of income paid (an increase of 6percentage points) while dividends represented33 percent, a 5 percentage point drop from1983. Figure A shows that the gap between in-terest and dividends as a percentage of totalincome widened to 26 percentage points in1984. For 1983, the percentage was 15.

"IF_cFm_-eJPqid

1 011fl; ~ 7814~qlll

59%

33%

ntere~l

Since 1980, interest's share of all incomeincreased .19 percentage points, from 40 to 59percent. The correspond

'ing share for dividends

fell by 15 percentage points, from 48 to 33percent. Figure B shows both total and averageannual increases for dividends and interest inboth constant and current dollars [8].

I

Foreign Recipients of U.S. Income, 1984 63

Figure B.--Interest and Dividends Paid, 1980and 1984

[Thousands of dollars]

Year and percentageincrease

Interest Dividends

Calendar year

1980 ...............1984 ...............

$ 2,604,30710,035,675

$3,147,7525,617,707

Percentage increase

Current dollars:

Total ............Average per year(compounded)....

285.3%

40.1

78.5%

15.6

Constant dollars:

Total ............Average per year(compounded) ....

205.8

32.3

41.6

9.1

Interest payments are often exempt from with-holding or taxed at low rates established bytreaties. With the passage of the Deficit Re-duction Act of 1984, certain types of interestincome, mainly portfolio interest, previouslytaxable, became exempt regardless of the coun-try to which it was paid. As a result, only$214 million of tax was withheld on interest in1984. This represented only 21 percent of alltax withheld, even though interest represented59 percent of all income. Dividends, which arerarely exempt from the withholding tax, repre-sented only 33 percent of all income, while taxwithheld on dividends comprised 68 percent ofthe total tax withheld. Figure A shows thepercentage of total income paid and the per-centage of total tax withheld for several in-come types.

Interest made up the largest percentage ofincome paid to all recipients in seven of thenine countries shown in Figure C. Only coun-tries receiving more than $500 million in U.S.source income were considered for inclusion inFigure C. As Figure C indicates, onlySwitzerland and France had a larger percentageof dividends than interest. This is in con-trast to 1983 when dividends made up a largerpercentage of income paid than interest formore than half of the top countries.

As in 1983, non-tax haven countries shown inFigure C received a greater portion of rentsand royalties (7 percent average) than theNetherlands Antilles, the Netherlands andSwitzerland (2.5 percent average), all of whichmay be considered, by some, to be tax havens to

some degree. More than half of all rents androyalties paid were industrial royalties. Thelatter include royalties for the use of, or theprivilege of using, trademarks, patents, secretprocesses and formulas, goodwill, franchises,and similar rights. One would not expect thesetypes of payments to be made to non-industrialcountries and most tax havens have a narrow in-dustial base. Switzerland and the Netherlands,tax haven countries which receive all types ofincome, are exceptions. Also, some U.S. corpo-rations may use tax haven countries to set upforeign companies that license royalties,therefore, resulting in rents, royalties andlicense fees paid to tax haven countries. Incontrast, rents and royalties accounted for 14and 12 percent of all income paid to France andJapan, respectively, non-tax haven countries.The Japanese payments were mainly payments by"high-tech" U.S. firms to "high-tech" Japanesefirms.

Country of Recipient

As is shown in Figure D, recipients in ninecountries accounted for nearly 90 percent ofall U.S. source income paid to foreigners in1984. All of these countries showed signifi-cant increases in income received over 1983,and six of these nine received income of over$1 billion.

The United Kingdom regained its position asrecipient of the most U.S. source income, sur-passing the Netherlands Antilles. Belgiumposted an exceptionally large rise in income,pushing it for the first time into the positionheld by France in 1983, as the eighth largestrecipient of U.S. source income. The nearly700 percent rise in U.S. source income paid toBelgium may be somewhat misleading since 90percent of the income paid to Belgium was re-ceived by Belgian nominees who may not havebeen the final recipients of the income. (Fora further discussion of nominees, see the sec-tion on recipient types later in this article.)

Tax withheld on payments to all of the coun-tries shown * in Figure D also rose from 1983levels. However, the rise in tax withheld wasgenerally less than the rise in total incomesince there was a large rise in exempt incomein 1984 (due, in part, to the 1984 Act whichhelped cause increases in total interest paidand, therefore, increases in total income paidto tax treaty countries).

The Netherlands Antilles was an exception tothe above generality. It showed a greater risein tax withheld than in income, thus narrowingthe gap between its percentage of income paidand the percentage of tax withheld from 18 per-cent to 14 percent. However, this was stillthe largest discrepancy of the countriesshown. Income paid to the Netherlands Antilles

64 Foreign Recipients of U.S. Income, 1984

Figure C

Percentage of Income Paid bySelected Income Type, .Selected Recipient Type, andSelected Country of Recipient,1984

Interest

Dividends

Rents andRoyalties

United Kingdom

AllReciplents Individuals Corporations$11 135 2.0

Billion Million Billion

$1.8 183 1.2Billion Million Billion

AllRecipients Individuals Corporations

I West Germany

56

L30 9

Canada

47

L, 0All Recipients Individual

~ $963 1 - 150million Million

61

L2810

All Countries

All Re6plents Individuals$17.1 1.2Billion Billion

j

All Recipients Individuals Corporations$2Z 49 2~13

Billion Million Billion

Switzerland

3

AllRecipients Individuals CorporationsSI,5 111 909

Billion Million Million

90

L6 2

5345

126

jL2 113

AflRecliplonts Indlitiduals C-orpritions;$827 43 - 107

Million Million Million

Owporations11.7

Billion

Netherlands

AllRecipients Individuals Corporations

$1.9 75 1.7Billion Million

IBillion

64

L12

81

L4 1

AllRecipients Individuals Corporations$1.4 1 115 1.2 '

Billion Million I Billion

53

ja14

48

2.32 34n

20 171 17

AllRecipients Individuals Corporalions$819 65 517

Million Million Mlion


Figure D

Percentage of Total Income Paid and TaxVVIthheld by Domestic Withholding Agents, byCountry of Recipient, 1984

Income PaW$17,1 billion15 10 6 0

IM-

16%

11%

11%1

9%1

8%1

6%1

5%

1M

I

Unftd Kingdom

Netherlands Antilles

Netiverlands

Clinada

SWItZedand

West Glarmany

Belgium

France

01tier Countries

Tax WtthheldS1,0 oillion

5 10 Is 20

2%

7%

13%

15%

14%

4%

2%

6%

1E

rose by 34 percent while the rise in tax with-held on payments to Netherlands Antilles resi-dents was 105 percent. This was a reflectionof the greater relative rise in taxable in-come.

Effective Tax Rate by Country

Although the basic U.S. withholding tax rateis 30 percent, the actual rate can differ for avariety of reasons. First, tax treaties allowfor lower tax rates on certain types of pay-ments to certain countries. Second, as men-tioned previously, the Deficit Reduction Act of1984 exempted most types of interest from with-holding tax. Third, income paid to tax exemptor governmental organizations is generally nottaxed. Fourth, most U.S. income paid to for-eign private foundations is taxed at only a 4percent rate. Finally, income that is con-nected with the recipient's U.S. trade or busi-ness is taxed as though it were received by aU.S. individual or organization, and is there-fore not subject to withholding tax (althoughit is subject to the regular rates of U.S. in-come tax on net income and may be additionallyreported on Form 1042S). Because of these fac-tors, the effective U.S. withholding tax rate(tax withheld as a percent of total income)varies by country.

Figure E shows the income paid, tax withheldby U.S. withholding agents, and the effective

withholding tax rates for the twelve countrieshaving the lowest effective tax rates. Taxwithheld by foreign governments and withholdingagents is not included in this table becausethe tax cannot be properly attributed to incomefor a particular year. Only countries re-ceiving at least 100 payments and $1 million ormore of income were considered for ranking.

Figure E.--Ranking of Countries by EffectiveTax Rates, 1984


Country

Allcountries 1/.

Totali ncome

(1)

Taxwithheld

Effectivetax rate

United ArabEmirates ........

.Egypt ............Saudi Arabia .....NetherlandsAntilles ........Trinidad andTobago ..........

Belgium..........Norway ...........Netherlands ......Finland ..........West Germany .....Portugal .........Singapore ........Othercountries I/ ....

(2)

$17,106,6321 $969,553

143,44928,580

351,990

2,812,549

18272

1,532

18,844

10,929826,99549,948

1,918,8899,352

963,16628,81626,709

10,076,727

13216,8961,118

66,137348

42,3981,3951,345

821,042

(3)

5.67%

0.130. 25'0.44

0.67

1.212.042.243.453.724.404.845.03

8.15

I/Includes all other countries, regardless ofnumber of payments or amount of income paid.

Newcomers to this list are the United ArabEmirates, Belgium, Norway, Finland andPortugal. Four of the previously listed coun-tries, United Arab Emirates, Saudi Arabia,Portugal and Singapore, are not tax treatycountries that received the benefits of reducedtax withholding rates. A substantial portion(78 percent) of Saudi Arabia's U.S. source in-come ($352 million) was paid to Saudi Govern-ment organizations and therefore not subject tothe withholding tax. More than 50 percent ofU.S. source income paid to Portugal ($29 mil-lion) was paid to private foundations andtherefore was subject only to the 4-percentwithholding rate. Former leader, Antigua, lostits position due to the cancellation of its taxtreaty with the United States. In 1984,Antigua's effective tax rate rose to 2.0 per-cent from 0.2 percent in 1983. (Antigua wasnot included in Figure E because it receivedless than $1 million in payments in 1984.)


Tax Treaty Countries

In order to avoid double taxation of incomeearned in one country by residents of anothercountry, the United States has negotiated taxtreaties with foreign countries that usuallyreduce the withholding rates in both countries[9]. It is generally believed that any U.S.withholding-tax revenue loss due to the taxtreaty rate reduction will be at least partlyoffset by a decline in the foreign tax creditsagainst U.S. income tax claimed by U.S. indi-viduals and corporations on income from thosecountries enjoying reciprocal benefits.

Since tax treaties generally provide for areduced withholding rate for U.S. individualsand corporations receiving foreign income andfor foreign recipients receiving U.S. income,U.S. individuals and corporations will haveless foreign tax withheld. This, in turn,should lessen their foreign tax credit claimedand consequently raise their U.S. tax liability.

Figure F shows the lower effective tax rateson payments to recipients in treaty countriesas compared to payments to recipients in non-treaty countries. Table 1 lists the tax treatyand nontreaty countries and provides corre-sponding Form 1042S data.

Figure F.--Total Income, Tax Withheld andEffective Tax Rate for Treaty and NontreatyCountries, 1984


Countrystatus

Allcountries ...

Treatycountries .....Nontreatycountries .....

Totali ncome

$17,106,632

15,607,203

I , 499,429

Taxwithheld

(2)

,$969,553

822,655

146,897

Effectivetax rate

(3)

5.67%

5.27

9.80

Although residents in tax treaty countriestypically enjoyed lower U.S. withholding taxrates, if the income were paid to a foreignnominee or fiduciary on behalf of a person notentitled to the treaty benefit, the full 30-percent U.S. tax shou

'Id be imposed. Those U.S.

treaty partners that collected the additionalamounts on behalf of the United States arelisted in Table 1, Column 7.

Tax Haven Countries

A tax haven is generally considered to be acountry having tax laws favorable to foreign

individuals and organizations in an attempt toattract these investors. The tax haven countrytypically benefits by collecting certain feesor taxes (at a low rate). Foreign individualsand organizations might not invest in orthrough the. tax haven if taxes comparable tothose of their own country were imposed. Taxhaven countries tend to have the followingcharacteristics:

4 No withholding tax on most paymentsfrom the tax haven country to foreignindividuals and organizations,

0 Low or zero effective income tax ratesfor foreign individuals and organiza-tions operating within the tax havencountry, or performing certain activi-ties, and

0 Secrecy laws. to prevent foreigngovernments from obtaining financialinformation about their own citizensand organizations.

Low or zero withholding tax rates are usuallydesigned to attract foreign individuals andcorporations to invest through.the tax haven,rather than to provide a tax- benefit for theirown residents, although a number of tax haven-countr-ies-have-low-tax-rates--in--an-effort-to-attract real productive investment into thecountry also. However, many tax haven coun-tries do not have tax treaties with the UnitedStates that allow for low or zero withholdingrates on payments to the tax haven. Whiletreaties with non-tax haven countries allow formutually-reduced withholding tax rates, thelost tax revenue on U.S. source income paid toforeigners is, as mentioned above, at leastpartially recovered in income taxes due tolower foreign tax credits claimed by U.S. tax-payers. The lower credits are a result of lessforeign taxes being paid by U.S. taxpayers ontheir foreign source income.

Figure G shows the percentage. of paymentsmade to corpo rations, along with their effec-tive tax rate, for selected tax haven countries[101. Only countries which received more than$1 million of income and 100 payments were con-sidered for Figure G.

As evidence that tax haven countries attractcorporations to them, note that the averagepercentage of payments to corporations in taxhaven countries is greater than the average fornon-tax haven countries. The effective taxrate for all but three tax haven countries isgreater than the total aver'age effective taxrate of 4.7 percent. For these three 'coun-tries, the Cayman Islands, the Netherlands andthe Netherlands Antilles, as well as forLiberia and Luxembourg, at least 50 percent ofincome paid was interest which typically wassubject to a lower tax withholding rate and was

Foreign Recipients of U.S. Income, 1984

affected by the Deficit Reduction Act of 1984.Also, two of the three countries with lowerthan average rates, the Netherlands and theNetherlands Antilles, are countries that bene-fit from reduced treaty rates.

Figure G.--Corporate Recipients in Selected TaxHaven Countries, 1984

Percent of--

Country

All countries .....

All non-taxhaven countries..

All tax havencountries ........

Bahamas .............Barbados ............Bermuda .............British VirginIslands ............

Cayman Islands ......Liberia .............Luxembourg ..........Netherlands .........Netherlands AntillesPanama ..............Switzerland .........

Allpaymentsreceived

(1)7.7%

6.9

17.8

25.929.117.9

23.441.716.231.913.447.727.313.3

Alli ncome

received

(2)

68.3%

59.6

81.5

48.490.960.6

67.759.992.648.680.787.643.661.3

Effectivetax rate

(3)

4.7%

5.7

3.6

18.520.025.0

19.74.0

11.59.42.30.3

18.99.1

Type of Recipient

Corporations received 68 percent of all in-come paid to foreign persons in 1984, while in-dividuals, and nominees, and fiduciaries (thenext largest recipients of income) receivedonly 7 percent and 9 percent, respectively. In

contrast, the percentage of tax withheld onpayments to individuals and to nominees andfiduciaries was disproportionately large rela-tive to the income received (15 and 12 percent,respectively), while the percentage of taxwithheld on corporations was a comparativelylow 56 percent of all tax withheld.

This latter discrepancy is reflected in theeffective tax rate for corporations of 4.7 per-cent, which may be compared to an effective taxrate of 7.8 percent for all other types of re-cipients combined. The effective tax rate forcorporations remained unchanged from 1983 buthas shown a steady decline after 1979 when therate was 9.2 percent. The decline has been aresult of a steady increase in payments of in-terest, caused by increasing U.S. interestrates, to foreign corporations which are gener-ally subject to lower withholding tax rates.

Nominees and fiduciaries received 9 percentof all income paid in 1984 making them the sec-

67

ond largest recipients of income. This may besomewhat misleading due to unusually largeamounts of income paid to Belgian nominees in1984, discussed earlier. If the payments toBelgian nominees were removed, the income paidto nominees would be halved and would representan amount in proportion to previous years'data. Without nominee payments to Belgium,nominees and fiduciaries would have received5.7 percent of all income paid in 1983 and 4.3percent of all income paid in 1984.

Governmental, international and tax-exemptorganizations received 2 percent of income paidyet accounted for only 0.4 percent of tax with-held because more than 92 percent of incomepaid to government, international and exemptorganizations was exemAt from withholding [11].

The largest average payment ($301,413) wasreceived by foreign governments; 77 percent oftotal payments to foreign governments were madeto the Government of Saudi Arabia. If SaudiArabia were excluded, the average payment toforeign governments would have fallen to$71,253. In contrast, the average payment bycorporations was $193,808, while individualsreceived by far the smallest average payment,$2,138.

On the average,- most recipient types receivedmore interest than any other type of income,the two exceptions being individuals and pri-vate foundations, which received more dividendsthan interest. Partnerships were more likelyto receive rents and royalties, while individ-uals received over 80 percent of all personalservice income [12]. For every recipient type,tax withheld on dividends far exceeded taxwithheld on any other income type. Figure Hshows the percentages of income paid and taxwithheld on various types of income for thedifferent recipient types.

U.S. and Foreign Withholding Taxes on Corpora-tions

Most foreign countries impose withholdingtaxes similar to those of the United States.U.S. individuals and organizations that receiveincome from foreign countries can usually takea tax credit for the foreign taxes withheld onthis income. Although foreign withholding taxrates tend to be similar to the U.S. tax rates,foreign countries, in general, withhold farmore total tax on payments to U.S. corporationsthan the United States withholds on similarpayments to foreign corporations. Althoughsimilar data dealing with the amount of incomepaid are not available, this withholding taxdisparity is probably due to U.S. corporationsreceiving more foreign income than foreign cor-porations receive U.S. income.

While this article is primarily concernedwith 1984 data, 1982 is the most recent yearfor which complete foreign tax credit data also

68

Figure H


Percentage of Income Paid and Tax Withheld, by Income and RecipientTypes, 1984

Individuals

Income $1.2 billion

361/6

Tax - $144 million

18% -541/6

FVZ~

5%

Partnerships

Government, Internationaland Exempt Organizations

Corporabons

Income - $11.7 billion

62%

Tax - $545 million

28% 64%

30%

6% 2%

7% 1%

Private Foundations

Income - $16 million

--1a0% 5%

5%Tax - $1 million

90/4 - 82% - 1190/9

Interest Dividends Rents and OtherRoyaftiei


are available for comparison purposes. For1982, $3.2 billion of foreign tax was withheldby foreign governments on the combined totalfor interest, dividends, rents, royalties andlicense fees received by U.S. corporationsclaiming a foreign tax credit [13]. Thisamount increased by 23 percent from 1980 andwas almost eight times the amount of U.S. taxwithheld in 1982 ($0.4 billion) on similar pay-ments to foreign corporations. The latter roseby only 13 percent over the 2-year period.

Figure I shows, for 1982, U.S. tax withheldon certain payments to foreign corporations andforeign taxes withheld on similar foreign pay-ments to those U.S. corporations claiming aforeign tax credit, by income type and coun-try. More tax was withheld by foreign coun-

69

tries than by the United States for each of theincome categories (dividends, interest, andrents, royalties and license fees) shown.

Foreign tax withheld on rents, royalties andlicense fees paid to U.S. corporations exceededthe U.S. tax withheld on rents, royalties andlicense fees paid to foreign corporations bymore than $1.1 billion. More than 60 percentof this difference can be accounted for byNorway, which taxed the large oil production-related royalties paid to U.S. corporations.

Foreign tax withheld on dividends paid toU.S. corporations exceeded U.S. tax withheld ondividends paid to foreign corporations by al-most $0.9 billion in 1982. This may have beencaused by the excess volume of U.S. investment

Figure I--U.S. Tax Withheld on Certain Payments to Foreign Corporations, Foreign Tax Withheld on Cer-tain Payments to U.S. Corporations Claiming a Foreign Tax Credit, by Income Type and Country, 1982

[Money amounts are in thousands]

Tax withheld on dividends Tax withheld on interest Tax withheld on rents,royalties and license fees

U.S. Foreign U.S. Foreign U.S. Foreign

Country payments payments Column 1 payments payments Column 4 payments payments Column 7to to U.S. minus to to U.S. minus to to U.S. minus

foreign corpora- column 2 foreign corpora- column 5 foreign corpora- column 8corpora- tions 21 corporations 21 corporation 2/tions l/

Itions l/

Itions I/

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Allcountries. 284,547 1,160,557 -876,010 107,313 868,965 -761,652 19,192 1,156,781 -1,137,589

Argentina ..... 37 14,615 -14,578 600 52,835 -52,235 92 5,791 -5,699Australia ..... 818 39,049 -38,231 390 15,240 -14,850 433 57,760 -57,327Belguim ....... 3,838 16,565 -12,727 4,281 4,608 -327 - 642 -642Brazil ........ 58 125,314 -125,256 675 296,927 -296,252 7 9,025 -9,018Canada ........ 25,000 255,364 -230,364 21,987 76,197 -54,210 3,926 82,170 -78,244France ........ 11,796 20,428 -8,632 4,085 2,477 1,608 1,842 24,552 -22,710Italy ......... 536 18,111 -17,575 920 4,879 -3,959 4 23,504 23,500Japan ......... 13,015 38,481 -25,466 30,215 6,439 23,776 10,403 78,214 -67,811Mexico ........ 289 39,418 -39,129 421 213,827 -213,406 316 38,287 -37,971Netherlands... 51,153 40,650 10,503 1,817 401 1,416 2 227 -225NetherlandsAntilles ..... 3,541 1,657 1,884 5,601 - 5,601 4 - 4Norway ........ 2 2,200 -2,198 317 56,987 -57,304 4 696,939 -696,935South Africa.. 1 29,339 -29,338 2 409 -407 6 8,568 -8,562South Korea ... 26 1,143 -1,117 8 891 -883 - 2,764 -2,764Switzerland ... 59,029 28,815 30,214 13,337 193 13,144 186 41 145UnitedKingdom ...... 71,823 143,539 -71,716 1,727 12,448 -10,721 290 4,295 -4,005

Venezuela ..... 529 37,497 -36,968 73 23,848 -23,775 6 5,795 -5,789West Germany.. 10,130 159,303 -149,173 5,604 604 5,000 4 620 -616Other

countries ... 32,927 149,069 -116,1421

15,2551

99,7551 -83,8661

1,6671

117,5871

1 -115,920

I/Does not include tax remitted by foreign governments and withholding agents since these amountscannot be allocated to specific years.

2/Does not include tax withheld on income received by U.S. corporations not claiming a foreign taxcredit. The amounts shown are for corporation tax returns having accounting periods which ended be-tween July 1982 and June 1983.


in foreign corporations over the volume of for-eign investment in U.S. corporations. In 1982,U.S. private direct investment abroad ($221billion) was more than twice foreign privatedirect investment in the'- United States ($102billion) [14].

Another factor contributing to this differ-ence may have been that foreigh'markets in mostdeveloping countries tend to be less stablethan U.S. markets. Thus U.S. corporations re-quire a greater return on their investment inthese countries than foreign corporations ex-pect on their investment in the United States.Because of

'the larger amount of dividends re-

ceived by U.S. corporations,. the foreign taxwithheld on them far exceeded the correspondingamount withheld by the U.S. government on divi-dends paid to foreign corporations. However,the difference in tax withheld on dividends de-clined from $1.1 billion for 1980 to $0.9 bil-lion for 1982 and possibly reflected growinginvestment by foreigners in the United States[15].

di vidends, foreign partnerships were morelikely to receive rents and royalties than anyother type of income.

Foreign governments once again received thelargest average payments, over $300,000 (duemainly to large payments to Saudi Arabia). Incontrast, payments to individuals~were smaller.

Nine countries, all having tax treaties withthe United States, received almost 90 percentof all U.S. source income. The United Kingdomwas the largest recipient, receiving $3.1 bil-lion in 1984. The past leader, the NetherlandsAntilles, received $2.8 billion. Tax havencountries continued to receive mostly interestand to have a greater-than -average percentageof payments to corporations.

DATA SOURCES-AND LIMITATIONS

Payers of most U.S. income to foreign, personsmust withhold tax in accordance. with theInternal Revenue Code. "The Form 1042S, Income

For 1982, tax withheld by foreign govern- Subject to Withholding Under Chapter 3,ments on interest payments to U.S. corporations Internal Revenue Code (now entitled, Foreign.also exceeded U.S. tax withheld on interest Persons' U.S. Source Income Subject to With-payments to foreign corporations. The differ- holding), is filed to report this income anden-ce increased by 26 ~percent. from .1980 ($607 , -the U.S. tax withheld. oft-en the p-a er-has amillion) to, 1982 ($762million). Most of t s financial institution act as the withholdingincrease was accounted for by increases in -for- agent.eign taxes withheld by Brazi I and Mexico.These two countries alone accounted for 67 per-cent of the difference for 1982. Both 'areheavily indebted to-U.S. banks and, therefore,made large interest payments whicti were subjectto foreign tax withholding. For 1982, over 90percent of all tax withheld by Brazil and'Mexico on interest payments to U.S. corpora-tions was withheld on interest paid -to U.S.banks ($461 million).

SUMMARY

High U.S. interest rates, a'.growing U.S.economy and enactment of the Deficit Reduct-ionAct of 1984, which exempted most types of in-terest from tax withholding, all contributed toa 57.pprcent rise in U.S. source income paid toforeign persons in 1984. Interest remained themost common type of income, 'rising to 59 per-cent of total income even though it only ac-counted for 21 percent of tax withheld.

Foreign corporations remained- the biggest re-cipients of U.S. source income, receiving 68percent of all income paid in 1984. Individ-uals received only 7 percent of income yet ac-counted for 15 percent of tax withheld. Thi swas because individuals received more dividendincome (which is rarely tax-exempt) than in--terest or any other income type.

Unlike corporations, which received mainlyinterest, and individuals, who received mainly

The present statistics are tabulated by cal-endar year, based on all Forms 1042S filed for1984. The years indicated in the tables repre-sent the year in which the income was paid andthe U.S. tax withheld, except for U.S. taxwithheld by foreign governments and withholding

.agents. These latter amounts are shown by th'e

year the, tax was remitted to the United -Statesunder treaty agreements. This additional tax'cannot be properly attributed to specific in-come types and years.

Tax withheld amounts and percentages shown inTable 2 and Figures A, B, and D through 1, donot include- tax withheld by foreign governmentsand withholding agents (except for Canada whichremitted its payments during the same calendaryear). Income that is "effectively connected"with a foreign person's U.S. trade or businessis not subject to withholding, and is thereforegenerally not included in these statistics [16,17].

Since all Forms 1042S are included in- thestatistics, 'the data are not subject to sam-pling error. However, the data are subject tononsampling error such as computer data entryerrors and minor taxpayer reporting errors.Forms 1042S with income greater than $500,000were manually ve'rified. A limited computerizedprogram was used to test the data for certain

.basic numerical relationships, including thecalculation of the correct tax withheld.


EXPLANATION OF SELECTED TERMS

Foreign Person.--For purposes of this arti-cle, a foreign person is an individual whoseresidence (for tax purposes) is not within theUnited States and who is not a U.S. citizen.Corporations and other organizations created ororganized outside the United States are alsoconsidered foreign persons.

Resident (of a jurisdiction other than theUnited States).--A resident is a foreign "per-son" as described above.

Income Effectively Connected With a Trade orBusiness. --Income that is "effectively connec!_-eTw__Oif~ the conduct of a trade or business inthe United States is exempt from withholding.This income is subject to substantially thesame tax rates that apply to U.S. citizens,residents, and corporations. Even if a foreigncorporation has an unincorporated operation inthe United States, a Form 1120F must be filedand appropriate taxes paid for the income ofthis operation. When income is then remittedto the foreign corporation, it is consideredconnected with a U.S. trade or business and notretaxed. In all but rare (and indeterminable)circumstances, these amounts are not includedin these statistics.

Nominee and Fiduciary.--An entity chosen orappointed to accept income for, or act on be-half of, the eventual recipient of the income.Typically a financial institution acts as anominee or fiduciary.

Withholding Agent.--Any person (individual,co-rporation, partnership, estate, or trust) re-quired to withhold tax. Usually the withhold-ing agent is the payer of the income or a "per-son" (usually a financial institution) actingon behalf of the payer. A foreign nominee orfiduciary required to withhold additional taxunder a tax treaty is also a withholdingagent.

NOTES AND REFERENCES

[1] For an explanation of portfolio interestand other types of interest that are ex-empt from tax, see U.S. Department of theTreasury, Internal Revenue Service, Pub-lication 515, Withholding of Tax on Non-resident Aliens and Foreign Corporations,November 1985.

2] Senate Report 99-130, "Crime andSecrecy: The Use of Offshore Banks andCompanies," Report by the Permanent Sub-committee on Investigations of the Com-mittee on Governmental Affairs, U.S.Senate., August 28, 1985, pp. 100, 101and 145.

[31 Eurobond placements are U.S. corporatebonds placed in foreign markets that aredenominated and sold in dollars and alsoyield dollar interest. See Scholl,Russell B., "The International InvestmentPosition of the United States in 1984,11Survey of Current Business, U.S. Depart-ment of Commerce, June TTI~5_, p. 29.

[41 Ibid., P. 31.

5] The term "territories" is used here toidentify jurisdictions associated with(or formerly associated with) the BritishCommonwealth as republics, dominions, in-dependent members and republics, associ-ated states, British crown colonies andindependent nations. "Territories" af-fected were Antigua, Belize, Dominica,Falkland Islands, Montserrat, St. Lucia,St. Chri stop her -Nevis, and St. Vincent.Former "territories" affected areBarbados, Gambia, Grenada, Malawi,Seychelles, Sierra Leone and Zambia.

[61 A new treaty with Barbados became effec-tive on April 1, 1986.

[ 71 Former Belgian territories affected wereBurundi, Rwanda and Zaire. As of 1986,none of these countries has signed a newtreaty agreement with the United States.

[8] Computed using the GNP Implicit PriceDeflator. See Economic Report of the

- rF_President, February 1986, p. 256. ecomputations shown consider the effectsof compounding.

E 91 IRS Publication 515, op.cit., includes adiscussion of specific treaty countriesand their appropriate rates.

[10] See Senate Report 99-130,.pp. 33 and 34,for a list of tax haven countries used inthis figure.

[11] Tax-exempt organizations may be taxed on"unrelated business income". See IRSPublication 515, op.cit.

[1 2] Business services are generally not in-cluded in these data si nce they areassumed to be "effecti vely connected"with a U.S. trade or business and, there-fore, are not subject to withholding tax.

[13] The $3.2 billion of foreign taxes with-held does not include tax withheld onpayments to U.S. corporations that didnot claim a foreign tax credit. No

measurement of the excluded tax withheld

is available. For additional information


on foreign withholding taxes by incometype and country, see the article en-titled "Corporate Foreign Tax Credit,1982: A Geographic Focus" by Chris R.Carson in this issue of the Statistics ofIncome Bulletin.

[14] Scholl, Russell B., "The InternationalInvestment Position of the United Statesin 1982," Survey of Current Business,U S. Department of Commerce, August 983,p. 44.

[151 Ibid.

[161 Data for foreign corporations with"effectively connected" income derivedfrom U.S. sources are presented inStatistics of Income--1979-1983,Compendium of Studies of InternationalIncome and Taxes.

[171 IRS Publication 515, op.cit., containsadditional information ibout income paidto and tax withheld on foreign persons.


Table 1.--Forms 1042S for 1984: Number of Returns, Total Income Paid, Tax Withheld, by Selected Treaty and Non-treaty Countries, 1984

[Money amounts are in thousands of dollars]

73

Income paid Tax withheld

Country or Number By foreigngeographic area of Exempt from Subject to By domestic government

Forms Total withholding withholding Total withholding and1042S agents withholding

Iagents

(1) (2) (3) (4) (5) (6) (7)

Total ............. 780,708 17,106,632 9,368,142 7,738,490 1,057,453 969,553 87v9OO

Treaty countries,total ................. 6439716 15v6O7,203 8,503,088 7,104,119 910,555 822,655 87,900Australia ........... 15,581 62,653 16,703 45,950 7,592 7,592 -Austria ............. 3,411 24,635 15,790 8,845 1,556 1,556 -Belgium............. 12,264 826,995 710v197 116,798 18,459 16,896 1,563Canada .............. 310,976 1,814,713 966,332 848,381 124,056 124,056 -Denmark ............. 2,497 13,492 8,313 5,179 737 734 3Egypt............... 452 28,580 28,204 376 72 72 -Finland ............. 683 9,352 6,460 2,892 348 348 -France .............. 18,625 819,238 204,876 614,362 60,601 60,408 193Greece .............. 5,787 9,102 4,819 4,284 1,200 1,200 -Ireland ............. 5,776 16,870 5,781 11,089 1,633 1,633 -Italy............... 9,190 66,465 25,292 41,173 8,227 8,227 -Japan ............... 12,264 1,393,545 146,343 1,247,202 130,418 130,418 -Luxembourg .......... 2,631 90,090 48,903 41,187 8,782 8,782 -Netherlands ......... 9,919 1,918,889 1,055,443 863,447 66,396 66,137 259Netherlands Antilles 3,257 2,812,549 2,7029547 110,002 18,844 18,844 -New Zealand ......... 2,116 5,061 615 4,446 576 576 -Norway .............. 3,985 49,948 43,212 6,736 1,118 1,118 -Poland .............. 410 5,109 1,877 3,232 898 898 -South Africa ........ 2,554 5,739 444 5,295 1,452 1,452 -South Korea......... 541 5,171 1,767 3,405 755 755 -Sweden .............. 6,237 99,950 24,553 75,397 6,723 6,723 -Switzerland ......... 23,904 1,450,913 314,813 1,136,100 226,525 141,565 84,960Trinidad and Tobago. 449 10,929 10,472 458 132 132 -United Kingdom ...... 136,555 3,091,489 1,462,897 1,628,592 179,093 178,172 921West Germany ........ 46,638 963,166 691,774 271,392 42,398 42,398 -Other treatycountries .......... 7,014 12,560 4,661 7,899 1,964 1,964 -

Nontreaty countriestotal ... : ............. 136,989 1,499,429 865,054 634,371 146,898 146,898 -Argentina ........... 5,749 15,879 7,845 8,034 2,185 2,185 -Bahamas ............. 2,430 46,280 14,857 31,423 9,072 9,072 -Barbados ............ 374 19,317 520 18,797 3,749 3,749 -Bermuda ............. 1,902 88,347 21,804 66,543 19,103 19,103 -Brazil .............. 3,440 20,830 12,345 8,4-85 2,527 2,527 -British VirginIslands ............ 432 14,393 566 13,827 2,825 2,825 -

Cayman Islands ...... 1,023 58,953 46,242 12,711 3,765 3,765 -Hong Kong ........... 10,886 65,494 27,296 38,198 11,235 11,235 -Israel .............. 4,877 12,156 3,044 9,112 2,272 2,272 -Jersey .............. 647 11,641 236 11,405 3,043 3,043 -Kuwait .............. 990 13,119 4,523 8,596 2,377 2,377 -Liberia............. 439 23,329 13,634 9,694 2,883 2,883 -Liechtenstein ....... 968 26,400 9,162 17,238 5,138 5,138 -Mexico .............. 13,530 52,905 11,593 41,312 12,274 12,274 -Panama .............. 3,499 100,865 52,574 48,291 14,319 14,319 -Portugal ............ 1,381 28,816 876 27,941 1,395 1,395 -Puerto Rico ......... 4,366 7,295 4,494 2,801 824 824 -Saudi Arabia........ 3,370 351,990 346,818 5,172 1,532 1,532 -Singapore ........... 3,571 269709 22,144 4,565 1,345 1,345 -Spain ............... 5,726 39,260 22,791 16,469 4,558 4,558 -Taiwan .............. 1,572 11,131 8,589 2,543 738 738 -United Arab Emirates 1,034 143,449 142,832 617 182 182 -Venezuela ........... 6,124 229151 139228 8,923 2,548 2,548 -Other nontreatycountries .......... 58,662 298,720 77,041 221,674 37,009 37,009


Table 2.--Forms 1042S for 1984: Number of Returns, Tax Withheld, and Total Income Paid by Income Type, bySelected Recipient Type and Country of Recipient, 1984


Country orgeographic area

Number ofForms1042S

(1)

All countries, total ... 780,708Individuals ......... ::1 572,259Corporations .......... 60,256

Antigua ......................Individuals ................Corporations ...............

Argentina .....................Individuals ................Corporations ...............

Australia ....................Individuals ..........Corporations .........

Austria ......................Individuals ................Corporations ................

Bahamas ......................Individuals ................Corporations ...............

Bahrain ......................Individuals ........... ......Corporations ......... : .....

Barbados ......................--Indi-vidual

Corporations ...............Belgium......................

Individuals ................Corporations ...............

'Belize .......................Individuals ................Corporations ...............

Bermuda ......................Individuals ................Corporations ........

**"'**Bolivia ......................Individuals ................Corporations ...............

Brazil .......................Individuals ...... .........Corporations ...............

British Virgin Islands .......Individuals ................Corporations ...............

Bulgaria.....................Individuals ................Corporations ...............

Canada .......................Individuals ................Corporations ...............

Cayman Islands ...............Individuals ................Corporations ...............

Chile .........................Individuals ................Corporations ........

*China ..................Individuals ................

Corporations ...............China (Taiwan) ...............

Individuals ............. ..Corporations ............ :..

Columbia .....................Individuals.................Corporations ...............

6646

65,7494,497

8915,50813,109

6813,4112,218,

1222,4301,098

630598487

28374

-200-109

12,2648,717

881887011

1,9021,006

341550472

113,4402,846

130432192101252226

10.310,976232,092

25,4641,023

229427

1,9701,567

861,152

97128

1,5721,376

202,5902,150

114

Taxwithheld

(2)

969,553143,611545,401

1331

2,1851,267

5877,5442,4563,1201,556

732310

9,0721,1174,148

624223281

3,749-1-39-

3,50216,8961,713

11,2831,070

61,037

19,1032,224

13,378131116

32,5271,322

803

3221.,916

126122

1124,05522,09161,763

3,765690

1',415970570222813374335738528

53746541

72

Total

(3)

17,106,6321,223,373

11,678,090

63020

58115,8797,8562,081

60,85614,35330,23024,6356,5539,378

.46,2804,797

22,3883,532

8002,150

19,317771-

17,551826,995

13,300106,701

3,96550

3,46488,3478,280

53,5271,228

76329

20,830.6,808

12,22614,393

1,3579,740

444431

41,814,713

183,2041,218,893

58,9534,563

35,3264,1942,622

7434,1572,6451,116

11,1312,431

7173,7982,468

595

Interest

(4)

10,035,675429,163

7,220,590

Income paid

Dividends Rents androyalties

Personalservice

(5)

5,617,707436,739

3,490,617

5142

5009,4732,8991,591

15,516.1,334

11,91813,615

1,1967,203

14,210867

6,1102,470

3691,9073,857

265--3,263

746,1653,039

56,0843,794

23,393

27,6211,200

17,37486042928

14,8132,477

11,4812,569

772,003

109105

1842,49129,386

690,51248,515

3,52330,827

1.~, 16059631627518122

8,150624674

1,550803355

3210

53,6142,589

1792394054,5949,9397,9522,6961,914

25,3142,425

11,3151,007

396239

15,388-459-

53,1156,010

27,972-155

3372

48,8615,900

26,277354318

12,4741,378

31511,5411,2287,578

2524

715,6 5793,247

349,7019,042

9153,3662,2491,528

2141,714

4311,0882,3841 234

331,7571,255

154

(6)

899,427100,000725,928

804

76397125257

14,4151 7877:886

469121250

2,826690

2,1281313

14,242291

13,815

4,39434

4,3541

66420740025228

1511 /T/

130,40013,910

108,6581,039

43991290

43212261257

22520

.1 /129112

15

(7)

155,629124,695

19,778

799759

354,7904,677

73850836

10317185

44

7,7621,9115,813

1,572763

6133

2,2282,173

193.193

18,87513,6413,327

948113

278268

135109

293288

5217164

23

I

Footnote at end of table.


Table 2-Forms 1042S for 1984: Number of Returns, Tax Withheld, and Total Income Paid by Income Type, bySelected Recipient Type and Country of Recipient, 1984--Continued



Costa Rica...................Individuals ................Corporations ...............

Czechoslavakia ...............Individuals ..........Corporations .......

Denmark. ::Indivi~ua*i;*.*.-.-* ........Corporations ...............

East Germany.................Individuals ................Corporations ...............

Ecuador ......................Individuals................Corporations ...............

El Salvador ..................Individuals ................Corporations ...............

Finland ......................Individuals................Corporations ...............

France .......................Individuals ................Corporations ...............

Gibraltor ....................Individuals................Corporations ...............

Greece .......................Individuals................Corporations ...............

Guam.........................Individuals.........Corporations ........

Guatemala ....................Individuals................Corporations ...............

Guernsey .....................Individuals ................Corporations ...............

Honduras .....................Individuals ................Corporations ...............

Hong Kong....................Individuals ................Corporations ...............

India ........................Individuals ................Corporations ...............

Iran .........................Individuals ................Corporations ...............

Ireland ......................Individuals ................Corporations ...............

Isle of Man ..................Individuals ................Corporations ...............

Israel .......................Individuals ................Corporations ...............

Italy ........................Individuals ................Corporations ...............

Jamaica......................Individuals ................Corporations ...............

Number ofForms1042S

L-O)96474642

40535512

2,4972,182

79411360

886474223

31026616

68358328

18,56513,7371,012

876118

5,7875,147

10736832810

797665

28330

74209738678

1410,8868,386

695.1,6451,453

42965822

155,7765,174

148186127

214,8773,949

1409,1907,710

249719628

9

Taxwithheld

(2)

434267

25505412

61734346165257235

3300275

6227196

10348157

7060,3965,584

28,875753430

1,200689115

2214

5298229

151,340

194858248189

3811,2354,2854,8761,413

501850347264

11,633

46970023210854

2,2721,241

4448,2275,0642,597

89642

Total

(3)

2,1881,515

852,1481,802

20413,492

2,9415,3202,6922,343

1612,3951,609

49893978840

9,3521,8045,286

819,18064,669

516,711264114113

9,1026,2811,131

2436722

1,815860739

5,427918

3,5061,3661,127

15165,49416,98025,4489,6035,0803,6391,6581,192

416,8704,6718,760

793367183

12,1567,1612,518

66946527,90629,8271,204

86811

Interest

(4)

387272

3278213

214,174

248490

1,5401,531

9457266

1238183

113,773

3092,012

251,05212,908

178,13018

17

2,2491,073

761170

420

803157597

1,543350

1,083123

9420

29,5322,235

10,8283,2131,924

710631376

1 /4,69-3

5543,346

9154

64,2851,4172,299

19,8342,992

12,51014386

Income paid

Di vidends Rents androyalties

(5)

1,14361073

10289

24,6911,3031,786

394390

1 /50-6428

2159250428

1,584201

1,354430,02816,091

247,20623611395

3,5622,020

36852422

819510142

3,862555

2,415434234122

33,03413,13913,344

481326

46886681

410,6822,0695,413

631241177

3,5031,647

11625,1117,167

15,036217160

11

(6)

101938

2429

1823,303

1343,045

33029

1448753604764641

1,98212

1,919116,48820,86386,472

10

10127117

11 /T/

114114

5

517

710

1,480454

1,0192,803

412,759

1515

1,1221,097

1/4745

32122855

10,4117,3272,021

204201 /

75

Personalservice

(7)

6563

1,2911,291

739672

279253

112112

3333

760759

8,4108,127

167

569535

22

329329

87178363

462429

53727

425424

1

1,2671,256

5,1874,959

159132132



Table 2.--Forms 1042S for 1984: Number of Returns, Tax Withheld, and Total Income Paid by Income Type, bySelected Recipient Type and Country of Recipient, 1984--Continued



Number ofForms1042S

(1)Japan........................ 12,264

Individuals ................ 9,641Corporations ................. 1,833

Jersey ........................ 647Individuals ................ 149Corporations ............... 152

Kuwait ....................... 990Individuals ................ 649Corporations ............... 89

Lebanon ....................... 1,681Individuals ................ 1,490Corporations ...... 0 ......... 21

Liberia................ 439Individuals ......... 306Corporations ........ 71

Liechtenstein ................ 968Individuals ................ 344Corporations ............... 222

Luxembourg ................... 2,631Individuals ......... e ...... 540Corporations ............... 839

Malaysia ..................... 1,059Individuals ................ 947

20-Mexico ....................... 13,530

Individuals ................ 11,746Corporations ............... 376

Monaco ......................... 495Individuals ............... 346Corporations ............... ~38

Morocco...................... 187Individuals ................ 132Corporations ............... 13

Netherlands.................. 9,919Individuals ................ 6,040Corporations ............... 1,330

Netherlands Antilles ......... 3,257Individuals ................. 843Corporations ............... 1,553

New,Zealand .................. 2,116Individuals ................. .1,790Corporations ....... 83

Norway ............... 3,985Individuals ................ 3,345Corporations ............... 127

Panama ........................ 3,499Individuals ................ 1,617Corporations ............... '954

Peru ......................... 1,576Individuals ................ 1,262Corporations ............... . 37

Phillippines ................. 4,165Individuals ............. * .. 3,597Corporations ................ 112

Poland. 410Individuals .... ............. 376Corporations ............... 11

Portugal ..................... 1,381Individuals ............. 4 ... 1,116Corporations ........ 37

Puerto Rico........... 4,366Individuals ................ 3,842Corporations ............... 266

Romania...................... 149Individuals ................ 132Corporations ............... 10

Taxwithheld

(2)

130,41810,958.

112,3513,043

1411,4152,377

6311,141

72054242

2,883240

2,4785,1381,1201,7448,782

5134,1 ll~

169132.-1-

12,2745 5935: 2831,199

7041592269215

66,1372,934

53,73818,844,3,584

11,016576235

421,118

410478

14,31 92,3148,388

31924122

1,034878

34898

71814

1,39523815'

824141629

5755

1

Total

(3)

1,393,545114,850

1,175,22411,641

4835,865

13,1192,2024,8994,9222,527

13923,329

1 ~ 14821,59326,4004,8807,039

90,0903,590

43,7651,119

530-484-

52,90523,45918,031

5,7563,566

5851,144

477107

1,918,88974,874

1,723,8462,812,549

48,7132,608,174

5,0611,846

32049,948

3,94843,197

100,86512,17558,855

2,7911,876

1004,8924,026

2035,109.2,1052,870

28,8161,273

4097,295

6686,243

328297

6

Interest

(4)

886,47693,305

722,838789

76239

7,347240

2,7572,017

36617

14,371337

13,8715,613

5842,503

46,2811,635

22,1215107333-1-

22,6885,229

10,4461,133

842. 792089315

995,64349,987

900,9502,619,895

24,8402,475,626

2,982265

4541,695

44940,14557,4834,889

33,3401,526

94519

1,072660151255130

733,573

210345

5,497127

5,3167866

4

Income paid

Dividends

(5)

280,7175,'861

251,90110,606. 406.5,4025;6421,9152,0742,1721,620

728,531.

7657,352

20,1094,2024,040

-42,4611,799

21,43846633431--

12,5648,4332,4293,9092,079

50669517792

865918714,902

777,083115,98122,64359,230

1,063687212

5,5421,3442,671

36,8296,595

20,183792577.-27

1,4641,101

372,807

.922,677

24,68055526

478393301818

.1/

Rents and,royalties

(6)

165,8191,645

157,83919

1212

Personalservice

(7)

10,1518,8161,261

711

682626

205 1 17465 124

40741

50

366 -224 172

2 21213 15122 1124 91

17 -22 37

1 3721 -

6,341 2,2815, 203' 2,228

646 2869 36857 368

D 1056 105

39,645 2,7704,328 2,564

34,220 3062,090 4221,130 40

60,680 98216 349123 33562

883 614368 613376 l/

3,461 -~9246 .29

3, i 37 446 18833 1163 18

120 190118 190

1117 1,55214 1,49290 3040 3266 ~322

34 4978 202

1 23887 4

~2 2012 201

I

I



Table 2.--Forms 1042S for 1984: Number of Returns, Tax Withheld, and Total Income Paid by Income Type, bySelected Recipient Type and Country of Recipient, 1984--Continued



Saudi Arabia.................Individuals ................Corporations ...............

Singapore ....................Individuals ................Corporations ...............

South Africa.................Individuals ................Corporations ...............

South Korea ..................Individuals ................Corporations ...............

Spain ........................Individuals ................Corporations ...............

Sweden .......................Individuals................Corporations ...............

Switzerland ..................Individuals ................Corporations ...............

Thailand .....................Individuals................Corporations ...............

Turks and Caicos .............Individuals ................Corporations ...............

U.S.S.R ......................Individuals ................Corporations ...............

United Arab Emirates .........Individuals ................Corporations ...............

United Kingdom...............Individuals ................Corporations ...............

Uruguay ......................Individuals ................Corporations ...............

Venezuela ....................Individuals ................Corporations ...............

Virgin Islands - U.S .........Individuals ................Corporations ...........

West Germany.............Individuals ................Corporations ...............

Yugoslavia ...................Individuals ................Corporations ...............

Zimbabwe .....................Individuals ................Corporations ...............

Other countries ..............Individuals................Corporations ...............

Number ofForms1042S

(1)3,3702,855

653,5713,226

1192,5542,307

5254143540

5,7264,716

2596,2375,496

15723,90410,6933,186

754663

13391215

386327

141,034

93013

136,55594,25712,2301,104

65363

6,1244,932

1792,1051,830

3946,63834,600

1,711870773

11129

9614

35,95725,4661,668

Taxwithheld

(2)

1,5321,164

1831,345

856342

1,4521,025

25875592

2054,5582,3941,2266,7232,5403,289

141,56512,80283,094

169117

22147

4790

10494

1 /1-92124

8178,17215,14480,495

710226221

2,5481,931

242187

5375

42,3988,791

20,792619242270473010

23,2506,7996,622

Total

(3)

351,9906,706

61sl8l26,709

3,08914,6615,7393,8781,2535,1711,2471,418

39,26010,8968,112

99,95014,21678,939

1,450,913110,519908,647

1,911879503518175304906410446

143,449432

8,2103,091,489

135,4711,980,017

5,5981,9461,258

22,15116,4002,8861,789

566787

963,166150,133629,107

2,236929914166110

33263,88540,823

125,663

Interest

(4)

327,576816

48,89310,809

1332,7691,1651,064

442,145

235962

26,3342,3756,841

10,2131,3618,198

463,71539,440

321,252947105432450151274247246

142,080121

8,189560,45524,567

047,4973,0221,239

4541291919,5751,068

605161335

539,47769,984

386,154449326272018

2124,28915,27897,440

9

I

Income paid

Dividends Rents androyalties

(5)

15,9693,005

12,2725,2412,5991,5963,0661,4811,1272,060

151447

6,7333,255

66366,344

2,34858,337

909,13059,991

527,1605133406549

430

10371

11,334

28721

1,308,97952,958

794,5852,352

607719

6,9765,284

475887366197

287,93437,207

177,1231300

186870107

5529

107,32714,85815,007

(6)

145145

8176

5276134

771413

11,136

319608

13,006476

12,29755,332

3,25849,092

256255

1919

50139

4441111

144,30916,638

102,864353

1 /1 , ~-36

235983234

26208

88,43715,75661,644

412316

3,657477

1,776

77

Personalservice

(7)

8,1692,632

110108

555540

1 /5781545

3,9983,924

6,9886,795

324,021299281,087

7464

1313

121

33,65127,7725,573

1515

914828

4047

4710,9429,2661,086

6767

5,7425,214

459

l/Less than $500.

Documents

Foreign Recipients of U.S. Income, and Tax Withheld, 1984 · Foreign Recipients of U.S. Income, and Tax Withheld, 1984 By Margaret P. Lewis* U.S. source income paid to foreign persons