Article:

Is your business managing its international tax risk?

18 November 2015

Chris Ball , Partner, Tax |

As an international taxation expert it would come as no surprise that, in my view, international tax planning is as important to a company as managing cash flow or choosing a leadership team.

If you operate offshore or are considering your expansion options, failing to proactively manage your taxation position could cause serious tax issues in the future – whether in Australia, your international markets, or both. For some companies, it can actually be the difference between achieving their offshore growth goals and having to return home.

Avoiding such an undesirable situation doesn’t need to be as daunting as one might think. In essence, it comes down to the following.

Five Principles for International Tax Planning

  1. Don’t pay tax in one jurisdiction where there are losses in another
  2. Minimise withholding taxes
  3. Where comparable tax rates apply, pay tax in Australia
  4. Take advantage of low tax jurisdictions
  5. Manage transfer pricing risk.
Using these guiding principles will ensure you can overcome the complexity that can arise from operating across international borders.

Importantly, this approach forces a company to take a whole of group view of taxation, which is crucial in ensuring every possible opportunity to reduce its tax burden – both for the company and its shareholders - is investigated. Not doing so could result in paying tax on the same income twice – definitely not a situation any company would like to find itself in!

There are a range of strategies that can be used once you have identified the international tax structure issues your company is facing, ranging from transfer pricing arrangements to funding structures. But, without the appropriate technical expertise, it can be difficult to determine the course of action best suited to your company.

In our eBook International Business: Is your tax structuring working for you? we outline a best practice approach to tackling common international tax planning challenges. We clearly define the Five Principles for International Tax Planning and provide further information about how you can effectively put a plan in place that will achieve your goals, while allowing flexibility for future growth.

Click here to download this free resource and learn more about how you can assess whether your international tax structure is exposing you to avoidable tax risks.

If you operate offshore or are considering international expansion I welcome your comments about the tax issues you have faced. To find out more about how you can tackle these issues, please connect with me.