Multinational companies are expected to pay tax to both their residence country and their country of origin. This requires a lot of careful planning to ensure that every policy related to it is taken into consideration. The following are a few factors to consider in international corporate tax planning Canada.
Understand the nature of the company. Most countries determine the duty obligation of a particular entity based on its structure. In most cases, companies that have full-fledged operations are usually subjected to taxation. These are companies that have functions such as customer service, accounting, information technology, and legal operation. Corporate with a single function might not be subjected to taxation due to lack of reliable market data, transfer pricing and inter-company pricing.
Consider the toll free income. There are a couple of incomes that are considered tax free according to the policies that have been established by the host country. These considerations are made to help the firm maintain its operation in the host country. Income that is gained overseas or from the country of origin is usually exempted from taxation. However, such income should be kept abroad.
Acquaint with the duty obligations in the residence country. Every country has its taxation regulations which you should comply with them. This is based on the rates that they have and the kind of income that they tax. Most countries expect compliance in both income and gross receipts and indirect taxes such as value-added tax and good and service tax. Duty experts should coordinate with valuation specialists to determine the subject entity that befalls in the duty regime.
Consider the transfer pricing duty. Multinational companies have cross-border transactions that ensure their efficiency in their operation. Any amount that is gained from overseas and is transferred to the residence country is also subjected to taxation. Necessary supporting documents are expected to show your transfer audits and exemption. Failure to provide this might subject you to non-compliance fines.
Acknowledge the non-operating properties and obligations. Assets that are not under operations, as well as liabilities, are not required to be taxed. This includes lands and other properties that have not been put into use, duty assets, levy reserves and loan guarantees. They are supposed to be recorded separately in the balance sheet after the valuation but should be indicated as non-operating assets. They can be subjected to taxation if they are not indicated as non-operating.
Check any investments made in subsidiaries. Multinationals usually have subsidiaries or start as subsidiaries when establishing their operation in a foreign country. Such kinds of entities are hard to report since they have not achieved a fully-fledged structure. Even so, they can still be taxed trough reporting of financial information of all investments made or through the equity method.
Make sure that you have done proper documentation. You are expected to provide significant information about your income and assets to the residence and home country. Your documents should provide information on foreign income, support for income that you are not qualified for and taxes that you have already complied with. Engage a professional auditor, valuation specialist and a professional lawyer who is acquainted with international taxation to compile the documents.
Understand the nature of the company. Most countries determine the duty obligation of a particular entity based on its structure. In most cases, companies that have full-fledged operations are usually subjected to taxation. These are companies that have functions such as customer service, accounting, information technology, and legal operation. Corporate with a single function might not be subjected to taxation due to lack of reliable market data, transfer pricing and inter-company pricing.
Consider the toll free income. There are a couple of incomes that are considered tax free according to the policies that have been established by the host country. These considerations are made to help the firm maintain its operation in the host country. Income that is gained overseas or from the country of origin is usually exempted from taxation. However, such income should be kept abroad.
Acquaint with the duty obligations in the residence country. Every country has its taxation regulations which you should comply with them. This is based on the rates that they have and the kind of income that they tax. Most countries expect compliance in both income and gross receipts and indirect taxes such as value-added tax and good and service tax. Duty experts should coordinate with valuation specialists to determine the subject entity that befalls in the duty regime.
Consider the transfer pricing duty. Multinational companies have cross-border transactions that ensure their efficiency in their operation. Any amount that is gained from overseas and is transferred to the residence country is also subjected to taxation. Necessary supporting documents are expected to show your transfer audits and exemption. Failure to provide this might subject you to non-compliance fines.
Acknowledge the non-operating properties and obligations. Assets that are not under operations, as well as liabilities, are not required to be taxed. This includes lands and other properties that have not been put into use, duty assets, levy reserves and loan guarantees. They are supposed to be recorded separately in the balance sheet after the valuation but should be indicated as non-operating assets. They can be subjected to taxation if they are not indicated as non-operating.
Check any investments made in subsidiaries. Multinationals usually have subsidiaries or start as subsidiaries when establishing their operation in a foreign country. Such kinds of entities are hard to report since they have not achieved a fully-fledged structure. Even so, they can still be taxed trough reporting of financial information of all investments made or through the equity method.
Make sure that you have done proper documentation. You are expected to provide significant information about your income and assets to the residence and home country. Your documents should provide information on foreign income, support for income that you are not qualified for and taxes that you have already complied with. Engage a professional auditor, valuation specialist and a professional lawyer who is acquainted with international taxation to compile the documents.
About the Author:
You can get valuable tips on how to pick a tax accountant and more information about a professional who offers international corporate tax planning Canada services at http://www.taxca.com/areas-of-practice now.
No comments:
Post a Comment