Mixer company

A mixer company is an intermediate holding company set up to consolidate or “blend” income from multiple foreign sources in order to optimize the use of foreign tax credits. It acts as a conduit, receiving income from countries with varying tax rates and distributing it as dividends, effectively averaging the foreign taxes paid before repatriation to the parent company.

Key Features: Functions as an intermediary between foreign subsidiaries and the parent company. Receives income from countries with higher or lower tax rates than the parent company’s jurisdiction. Helps maximize the efficiency of foreign tax credits, reducing overall tax liability. Commonly used in multinational corporate structures for tax planning purposes.

Example: A parent company in India has subsidiaries in Country A (tax rate 30%) and Country B (tax rate 10%). A mixer company is set up in a jurisdiction with favorable tax laws. It collects dividends from both subsidiaries, distributes them strategically, and helps the parent company optimize foreign tax credits to reduce the net tax paid in India