Legal Definitions - DISC

Definition: DISC stands for Domestic International Sales Corporation. It is a type of corporation that was created by the U.S. government to encourage American companies to export their products. A DISC is a tax-exempt entity that allows companies to reduce their tax liability on profits earned from exporting goods.

Example: Let's say that a company called ABC Inc. exports $1 million worth of goods to Europe. If ABC Inc. sets up a DISC, it can transfer the profits earned from exporting to the DISC. The DISC will then pay a lower tax rate on those profits, which reduces ABC Inc.'s overall tax liability.

Explanation: The example illustrates how a DISC can help a company reduce its tax liability on profits earned from exporting goods. By setting up a DISC, the company can transfer its profits to the DISC, which is taxed at a lower rate. This reduces the company's overall tax liability and encourages it to continue exporting its products.