Corporate entities are leaving no stone unturned in touching new markets. They are going global and expanding their customer base. Amidst all the globalization, tax planning is a real challenge for corporate entities. Every country has its unique tax regime, which is a hassle for international corporations. To successfully navigate through international taxation obstacles, companies invest in tax planning. As the craze for globalisation has increased, corporate entities count on international tax planning services. With the correct planning, companies can legally save on taxes in different nations. Read on to understand how international tax planning saves money for corporate entities.
What exactly is tax planning for international businesses?
International companies indulge in cross-border transactions/deals frequently. With international tax planning, they can arrange cross-border transactions for a minimum tax burden. Business processes and cash flows are legally routed to end up with a minimum tax burden. The source and destination of a cross-border transaction are followed via international tax planning. Besides decreasing the cumulative impact of taxes on the company, international tax planning also focuses on tax compliance. Every country has its rules, and international tax planning ensures compliance with all of them. On the other hand, domestic tax planning focuses only on the tax regime of the source country.
The interrelationship of two or more tax regimes is observed in international tax planning. International tax experts also focus on the tax compliance structure of each country. Based on the interrelationships between tax regimes, tax planners create an effective strategy for the company. All business processes and transactions are carried out according to the tax strategy. It will help the company to minimise tax liabilities and ensure regulatory compliance. International tax planning services also focus on money-saving options like tax treaties, schemes, exemptions, and incentives. Some activities that fall under international tax planning are as follows:
- Determining the correct transfer price for cross-border transactions between related parties
- Understanding the tax regime of foreign countries and ensuring compliance
- Making the best use of available tax incentives and exemptions
- Avoiding non-compliance with tax regimes in foreign countries
- Determining the right strategy for expatriate taxation
- Planning asset transfers with domestic and foreign companies
- Setting holding structures in tax-efficient countries/jurisdictions
- Planning for intellectual property migration
Besides the activities mentioned above, international tax planning covers many other areas. Business owners must understand how international tax planning can help them save money.
Understanding how tax planning helps save money
International tax planning saves money for multinational corporations in many ways. Every country has some tax schemes for global businesses. For example, a country might offer tax discounts to companies filing annual returns early. However, most business owners aren’t familiar with tax schemes in foreign countries. With the help of international tax experts, a company can make the best use of available schemes. Besides tax schemes, several jurisdictions also offer tax exemptions to certain companies. However, there are many conditions for tax exemption for international businesses. International tax experts can help a company fulfil the conditions for tax exemptions.
It is crucial to note that international tax planning saves money legally. Under any circumstance, international tax experts do not suggest tax evasion to companies. Instead, they ensure that an international firm stays compliant with tax regimes in different countries. When a company stays compliant with tax regimes and files returns timely, it avoids penalties. Many international organisations waste money while paying tax fines in different countries. With the right set of tax experts, companies can avoid penalties due to non-compliance.
International tax planning services focus on routine business activities for tax efficiency. From procurement of goods/services to distribution among customers, everything is carried out according to the tax plan. By doing so, a company will have a minimum tax burden in different jurisdictions.
How to implement international tax planning?
Most companies do not have international tax experts sitting idle. International tax experts are skilled individuals that might not be available full-time for your organisation. The best way to implement international tax planning is to look for an outsourcing partner. With an outsourcing company, preferably a CA firm, an organisation can minimise the overall tax burden. It does not have to use internal resources and employees for international tax planning. Look for reliable international tax planning services to become tax efficient!