Tax issues on management fees to foreign corporations

In the arena of international transactions, management and service agreements between interrelated companies within a multinational corporation is an inevitable consequence of globalization. The diversity of cultures among different nations necessitates the proliferation of management and service agreements between a domestic corporation and its parent or affiliate Non-Resident Foreign Corporation (NRFC). Management services are advantageous to groups of companies, as member companies or affiliates will benefit from the expertise of these groups and, in the process, they can ensure the quality and uniformity of practices among all the subsidiaries. They can also be a catalyst for taking advantage of the efficiencies and economies in maintaining resource centers among the member companies.