Multinational companies and firms that have moved their operations to a foreign country must pay taxes to the host and origin countries. Such considerations require a lot of planning to ensure that this process is carried out according to the policies that have been established. Here are tips for international corporate tax planning Canada that one should take note.
Start by understanding the structure of your firm. Most countries expect duty obligation from companies that have a full-fledged operation. This means that the company should have operations such as accounting, information technology, legal operation, and customer services. Those which have a single function such as marketing, manufacturing or sales cannot be taxed since they do not have reliable market data, inter-company pricing and transfer 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 regulations that are established. International corporate should acknowledge all the regulations that are established in the residence country for easy compliance. Indirect taxation is the most common form of obligation that a firm is expected to comply with. This includes the value-added duty as well as the service and good duty. Some authorities can go to the extent of taxing the income and gross receipt which is very rare.
Consider taxation that applies in transfer pricing. Most international companies engage in cross-border transactions to ensure that their operations are efficient and obtain cost efficiency. You need to have a proper transfer pricing planning, audit support and documentation to reduce possible tax risks and achieve a remarkable overall economic result.
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.
Beware of investments in subsidiaries. Multinationals usually start as small holding companies before they become a fully-fledged international corporation. Reporting for such entity can be daunting since it does not meet the required ownership structure. However, they can be subjected to taxation in various ways. This include reporting historical financial information inclusive of all investments in subsidiaries. Besides that, reporting can be done using the equity method of accounting.
Make accurate documentation. You must provide enough information related to your income and the assets that you possess to duty authorities in your residence and home country respectively. The report should include information about your foreign income, support for excise exemption and proof of your levy you have complied with. Such tasks require the involvement of professional auditors, foreign tax lawyers and a valuation specialist to come up with an accurate document.
Start by understanding the structure of your firm. Most countries expect duty obligation from companies that have a full-fledged operation. This means that the company should have operations such as accounting, information technology, legal operation, and customer services. Those which have a single function such as marketing, manufacturing or sales cannot be taxed since they do not have reliable market data, inter-company pricing and transfer 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 regulations that are established. International corporate should acknowledge all the regulations that are established in the residence country for easy compliance. Indirect taxation is the most common form of obligation that a firm is expected to comply with. This includes the value-added duty as well as the service and good duty. Some authorities can go to the extent of taxing the income and gross receipt which is very rare.
Consider taxation that applies in transfer pricing. Most international companies engage in cross-border transactions to ensure that their operations are efficient and obtain cost efficiency. You need to have a proper transfer pricing planning, audit support and documentation to reduce possible tax risks and achieve a remarkable overall economic result.
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.
Beware of investments in subsidiaries. Multinationals usually start as small holding companies before they become a fully-fledged international corporation. Reporting for such entity can be daunting since it does not meet the required ownership structure. However, they can be subjected to taxation in various ways. This include reporting historical financial information inclusive of all investments in subsidiaries. Besides that, reporting can be done using the equity method of accounting.
Make accurate documentation. You must provide enough information related to your income and the assets that you possess to duty authorities in your residence and home country respectively. The report should include information about your foreign income, support for excise exemption and proof of your levy you have complied with. Such tasks require the involvement of professional auditors, foreign tax lawyers and a valuation specialist to come up with an accurate document.
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