EastLaw, Inc., a U.S. corporation, has developed an on-line legal research datab

Question

EastLaw, Inc., a U.S. corporation, has developed an on-line legal research database. EastLaw, Inc. owns all of the stock of Foreign Base Company, S.A., a corporation formed under the laws of Bermuda, a low-tax country. Foreign Base Company, S.A. purchases access to the legal research database from EastLaw, Inc. and then sells access to the database to various unrelated third-party customers located in foreign countries outside of Bermuda. Is the income that Foreign Base Company, S.A. earns from these sales of access to the database foreign base company income?

Explanation / Answer

As given in question ,East Law ,a US corporation developed an online legal reserach database which is purchased by Forien Base company SA , in which East Lae , US has owns all the stock .

Foreign Base company SA has sold that dataase to unrelated third party located in low tax country .

As in bermuda no income tax is leviable.

whatever earnings from sale of online database , all the income will be chargeable in the hands of EAst Law,Inc US Corporation .

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