Interest Charged Domestic International Sales Corporation (IC-DISC)

Jennifer Powers, CPA

The Interest Charged Domestic International Sales Corporation (IC-DISC) is one of the few remaining tax benefits to U.S. companies that export offshore. The IC-DISC provides multiple benefits including ease to create, exemption from U.S. taxation, and the dividends distributed from the IC-DISC meet the criteria for the qualified dividend tax rate.

Background
The IC-DISC provisions have been in place since 1984. Over the years, many of the benefits provided to U.S. exporters have been criticized by the major trading partners of the U.S. This led to the repeal of a majority of the tax rules for U.S. exporters. However, the IC-DISC has not yet been abolished as its benefits are geared toward small businesses in compliance with the General Agreement on Tariffs and Trade (GATT).