Operating even in a single jurisdiction in this competitive business era is a challenge. Global companies operating in multiple jurisdictions find it hard to meet the compliance requirements. The biggest challenge is to adjust according to the tax regime in each business jurisdiction. By failing to adjust according to the tax regime of any country, companies invite legal hassles. Even if a company hires the best tax advisors in the country, they might not know the tax regimes of other countries. International tax planning is one of the trickiest tasks for companies operating in multiple jurisdictions. Read on to know ten things about international tax in 2022.
- Know the concept of international tax planning
Knowing the tax regimes of all countries isn’t enough for a company. One needs to adapt to the tax regimes of different countries. All the tax processes must be streamlined according to the tax regimes and compliance laws. With international tax planning, the tax burden on a global company can be minimized. One can leverage the power of tax benefits in each country with effective international tax planning.
- The goal of international tax planning
Make sure you don’t misinterpret the goal of international tax planning. By lowering the tax burden, one cannot run from taxes. It means shaping the business activities in a way that the company ends up paying the least taxes. International tax planning is done according to the compliance laws. Tax evasion should not be confused with international tax planning at any cost.
- Research before expanding the business jurisdiction
A company cannot expand its business in a new country without prior analysis. International tax planning needs research before expanding to a new country/region. Many stakeholders use the tax rate for profits to decide the financial performance. It is why one needs to perform prior research before expanding in a new business jurisdiction.
- Cross-border transactions can be tricky
Consider an accountant familiar with the tax regime of the native country. The accountant may face issues when it comes to cross-border transactions. It may need support from an individual aware of the transaction rules in different countries.
- Take support from an international tax consultant
Business owners need to take help from an international tax advisor to successfully operate in multiple jurisdictions. International tax planning is tricky, and not every accountant can do it. However, an international tax planner/advisor is well-aware of the tax regimes in different jurisdictions. They can help a company with different types of taxes in numerous jurisdictions.
- Outsource your tax planning requirements
You need to hire tax experts familiar with the global landscape for international taxation. Finding international tax advisors can prove costly for a business. It is why companies outsource their international tax requirements to a reliable third party. In a country like India, one can find many CA firms that can offer international taxation services.
- Focus on expatriate taxation
Many people have to renounce their citizenship due to their occupation. Therefore, if a company has many ex-pat workers, it needs to focus on expatriate taxation. Expatriate taxation can get complex at times and is considered a part of international tax planning.
- Follow the transfer pricing regulations
If a company is present in more than one country, it may have to go through transfer pricing. When a company buys products/services from another branch/subsidiary, the price charged is termed transfer price. Several regulations govern the transfer pricing transactions. The rules ensure that a country does not have an undue tax advantage by transferring products/services to any of its subsidiaries.
- Look for NRI services
Many companies in India have to deal with NRIs daily. The taxation rules can be different for an NRI coming to India or generating income from India without being in the country. If needed, a company can seek NRI services from a reliable CA firm.
- Focus on cost considerations before outsourcing
Before outsourcing international tax planning requirements, you need to focus on cost considerations. Choose a professional services firm that can offer international tax planning services at a reasonable rate. A company does not have to use its internal resources for international tax planning. Start taking international tax planning seriously to expand your business! Also, Check our other blogs.