Tax planning plays a pivotal role in any given business. It is to be done in such a manner that you pay the least possible tax that’s required from you. International tax planninghas to be the top level at which you have to plan your taxes. The need for an international tax planning firmis going to be felt by a company dealing with its business across the globe and there’s no doubt about it. But what are these strategies going to look like? With the help of an international tax lawyer,here are some of the strategies that you can implement:-
1. Income Shifting Strategies
One of the best ways to conduct international tax planning has to have operations structured in such a way that profits are maximized in low tax jurisdiction and minimized in high tax jurisdiction. Suppose if the taxes on your income are high in Australia but low in India. With the help of an international tax lawyer, you can easily transfer your income from Australia to India. This is one of the best moves to save loads of money with you which otherwise would have been required to deal with taxes. While doing so, one needs to be careful not to fall foul of General Anti Avoidance Rules. If this is done in a manner that is considered to be artificial income shifting it may fall foul of GAAR of any given jurisdiction or may result in denial of benefits under the Double Tax Avoidance Agreement.
2. Be Prepared For International Regulatory Changes
When you have to deal with a country, it is easier to fix all your issues regarding taxation. You can comfortably predict when there are going to be changed in the taxation policy of that country. But when you’re dealing with your business in various parts of the globe, it is far difficult to keep up with the changes that might be brought upon in the future. This is why assistance from an international tax planning firm is felt in the first place. It is only an expert who can deal with international tax planning. If you’re able to keep up with all the changes that are or will be brought upon the taxation policy, you can be in a better state to plan to pay your taxes accordingly.
3. Using Tax Havens
This is one of the strategies which have been adopted by most of the international tax planning firms across the globe. Many countries across the world will charge taxes from you only if you remain a resident within their borders. They are generally referred to as “tax havens”. Tax havens allow you to minimise your taxes in high-tax countries as well. When you’re operating your business at such a huge scale, you should keep up with international tax planning to a great extent. The concept of using Tax Havens is getting more and more difficult and also may result in falling foul of laws. However, structuring operations in countries that could enable a conglomerate in International Tax Planning through the use of Double Taxation Avoidance Agreements is advisable, whereby tax bills could be reduced significantly.
4. International Holding Company
Many reputed businesses adopt the strategy of keeping an international holding company to better their international tax planning. Most of the time, a business comes up with its holding company within the boundaries where it is operating a business. It is way better to look for a low-tax jurisdiction to set up your holding company. Most of the business giants have adopted this strategy and have earned huge benefits from it by saving millions of dollars. While going for International Tax Planning using this strategy, it is advisable to take help from a competent International Tax Planning Firm as any such planning could be undertaken after due consideration of DTAA provisions and Controlled Foreign Corporation rules, if any.
5. Avoid Double Taxation
One of the common mistakes on part of a business is that it pays multiple taxation duties on the very same income. It is due to the taxation policies of different countries which makes it important for the business to keep an eye on international tax planning.You have to strategize your taxation in such a manner that you can avoid paying double taxes.
These are all kinds of strategies that can be adopted by a business with assistance from an international tax planning firm.When you grow in terms of profits, you have to pay a larger tax on it as well. The most effective international tax planning would be to adopt strategies that allow you to minimize your taxes!
R & D Law Chambers is a full service firm providing Commercial, Legal and International and Domestic Tax Advisory services with operations in India and UK/EU. To know more visit https://rdlawchambers.com/
The content of this article is intended to provide general information. No reader or user should act or refrain from acting on the basis of information written above without first seeking legal advice from qualified law practitioner.