What is international tax planning?
Business businesses in more than one country are confronted with a new set of tax problems, as their presence in the other country could cause it to be responsible for the taxes of profits in this country. This leads to the possibility of double taxation, because the company's home country can try to tax the same income. International tax planning comes here because careful planning is required to ensure that the company is not penalized for business in more than one country. It may be necessary to pay additional taxes, such as turnover tax or value added tax, in the second country, and planning can ensure that there are no sanctions. The international group may need to comply with the regulations imposed by both countries in terms of price transfer, thin capitalization or controlled foreign companies, and these rules must be carefully monitored in each country.
Business Transing in another country isUsually the subject of taxation from business profits in this country if it has a permanent device. It could be a fixed place of business, such as an office or factory, or it could be a dependent agent in a country that performs the power to conclude contracts. Foreign countries will want to tax payments leaving the country in the form of dividends, interest or license fees. The sale of assets in the second country may cause the enterprise to be responsible for taxation of capital gains. The home country can provide unilateral relief for paid foreign tax or tax authority of the home country and the source country can be regulated by a double taxation agreement.
If a company does business in more than one other country, detailed international tax planning is necessary to ensure that the supplier chain will be rationalized and do not lead to unnecessary high taxation. The company may consider the creation of regional holding companies Stocks in regional distribution companies. These can be placed in jurisdikcI, which has a favorable tax regime for such holding companies and a wide network of double taxation contracts that allows effective management of tax obligations in the region. Regional managers can gain detailed knowledge of the regulatory and tax requirements in the region, giving them the ability to engage in international tax planning and respond to regulatory changes.
International tax planning includes detailed knowledge of the company's activities and the latest regulatory requirements in each country in which the company operates. The company may be able to use tax relief or free trade zones in another country. The transactions must be planned and documented to meet the requirements in each country concerning accounting and tax records and the relevant documentation must be prepared to justify the transfer price for the sale of the goods and the Group.