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International taxes

Because MIT is generally liable for taxes outside of the United States, we must carefully plan and manage the type of activities that will occur in a foreign country to mitigate uncertainty and risk.

Although MIT is a tax-exempt organization in the U.S. and is exempt from certain taxation related to its charitable activities, MIT is generally not exempt from tax liability in other countries.

Given the tax implications, MIT does not want to carry out activities in-country that are considered by the local tax authority as evidence of a permanent establishment, or “PE.”

Anyone planning an international project should also consider withholding tax implications. MIT typically asks the sponsor to pay withholding tax to ensure adequate funding is available for the activities of the program.

Please let your Research Administration Services (RAS) Contract Administrator or Office of Strategic Alliances and Technology Transfer (OSATT) Catalyst know if your program plans to have more than incidental activity or presence in a foreign country. With advance planning, we can help mitigate uncertainty and risk.

What financial and legal issues need to be considered?

International projects bring multiple financial and legal considerations, such as:

  • Being aware of tax codes or laws that impact payment of overhead.
  • Understanding the implications of a sponsor who wants to pay with non-U.S. currency.
  • Asking the right questions, such as “Will sponsor funds be taxed upon leaving the country?,” “What is the sponsor’s policy on overhead?,” and “Do they have policies on what costs are allowable?”
  • Analyzing and getting advice from MIT’s tax and legal specialists or outside experts to determine what laws or tax codes apply for your type of sponsor and/or particular country.

For more information about international tax issues, please contact the VPF Tax Team.

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