- Permanent tax savings on export sales
- Increase liquidity for shareholders
- Create management incentive
An interest-charge domestic international sales corporation (IC-DISC) is a tax-exempt, domestic corporation set up to receive commissions on a company’s export sales. This is a ‘paper’ corporation which requires separate banking, accounting, and tax filings but does not require a physical location or employees.
Many of the IC-DISC structures in place today are used to either take advantage of favorable U.S. tax rates on dividend distributions or to direct a steady flow of cash distributions to a specified group of shareholders. An IC-DISC requires the formation of a US corporation with minimal capital, contractual agreements with the exporter, and submission of an initial tax election and subsequent annual returns. There is no limitation on who can own the IC-DISC.
IC-DISCs are domestic corporations. The exporting company or its shareholders create a domestic corporation to become the IC-DISC.