The IC-DISC Program

Benefit of a Tax Exempt DISC  
(Formed In Delaware.)

How it Works

• Exporters deduct commission paid to DISC based on greater of two formulas;

  • 50% export Profit or 4% of Gross Exports, (50 % formula applies with a Profit Margin is 8% or more.); 4% Applies to high gross/low margin Exports, but not to exceed actual export profit).

• DISC distributes profit (Commissions less Expenses) to its Shareholders. (Usually the same Shareholders as the Exporting entity).  

• DISC shareholders report Dividends as Qualified Dividends, taxed @15% vs Exporter deduction @35%.

  • (Assuming an 8% profit margin with a 50 % deduction times a 20% tax rate spread the net benefit is equivalent  to 10% of the Export Profit)

  • (Assuming 4% of gross Exports equals export profit, commission would be 100% of Export Profit).
    

Qualifying Shipments:  

• Only Shipments made on or after the date of Formation qualify.
  (No $ limit on Exports or Benefits). 
  
  
• Benefit only applies to individual Shareholders, which allows for pass thru tax vehicles, Partnerships, Sub S, LLCs etc.
  
  
• Please Note: The often referred to Export limit of $10 Million,  only applies to the the Interest Charge Factor, which we do not recommend to our clients.
  
  
• Indirect Exports, via distributors also qualify as Exports for both wholesaler and Distributor.
  
  (Statement required from Distributor to wholesaler stating that goods were,  reshipped "intact"within 12 months.) (Intact, means the goods did not become components within a shipment.)
  
  

Overlooked Exports:   

Architecture and Engineering Fees-Only the project has to be Foreign.        

* Email or call for application,  

DISC may be formed in 1 or 2 Days.  Complete "Turnkey" Service.

Set Fees:

Formation:   $ 2,500.  +  

Annual:  $1,500.   

We pay all Delaware fees and expenses.                           

           See Tax Advisor for State Tax treatment of IC-DISCs

                             The Export Subsidy Company