According a January 8, 2018 Federal Register notice here, the U.S. Department of the Treasury (Treasury) published it’s quarterly “List of Countries Requiring Cooperation with International Boycott”. According to the notice, the following countries do require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986:
Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen (all 9 of these countries have previously been designated as boycotting countries).
The Treasury rules apply to U.S. taxpayers, including but not limited to members of a controlled group, regardless of whether the transaction involves U.S. goods or services. The rules do impose reporting requirements on U.S. taxpapers and their related companies. If taxpayers have coopreated with an unsanctioned boycott, they are denied certain tax benefits as a peanlty. U.S. taxpapers must report anything related to boycotting countries by filing IRS Form 5713 and attaching to the taxpayer’s federal tax return.
If your company does business overseas, it is important to be aware of reporting found instances of boycott laws and regulations and ensure your company is in compliance with all of the rules. We find our clients sometimes overlook the boycott issue, unfortunately Customs will not, and failure to comply with boycott rules may result in significant penalties.
If you have any questions regarding boycotts, contact David Hsu at 832.896.6288 or by email at: email@example.com.