What defines a foreign entity in business terms?

A foreign entity in business terms refers to a business that operates in a country or jurisdiction different from the one in which it was formed or incorporated. This means that if a company is established in one country and then conducts business in another, it is considered a foreign entity in the context of that second country.

Option B correctly identifies that a business established outside the country of operation is what categorizes it as a foreign entity. This distinction is important because such businesses often have to comply with specific regulations, tax laws, and licensing requirements of the jurisdiction in which they are operating, which may differ from those in their home country.

Understanding the concept of foreign entities is crucial for contractors and businesses that engage in cross-border operations, as it affects compliance, legal responsibilities, and strategic planning in international markets.