We're going to distribute profit of our C-corp. It has 3 partners: 2
U.S. residents and a foreign individual. The question is if we should
withhold 30% tax on profit portion to be paid to the foreign partner. I've
tried to go through IRS instructions and it looks like that NOT, but
some paperwork is involved:

- the foreign partner has to get a TIN;
- supply Form W-8ECI claiming exemption as "income effectively
connected with a U.S. trade or business";
- file Form 1042-S next year with -0- tax.

Is this correct or I missed/misunderstood something? A good advice on
withholding tax, if any, is really appreciated!

The Internal revenue Code requires 30% withholding on dividends paid
to foreign persons ( IRC section 871).  his is not "Effectively
Connected Income".
However the 30% rate may be reduced or even eliminated if the U.S. has
a Income Tax Treaty with the nation of the recipient of the dividends.
 The IRS has a publication detailing the different treaties and the
negotiated "Treaty Rates" for the withholding tax.