Factors To Consider In International Corporate Tax Planning Canada
by Sarah Davis
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 <a href="https://www.taxca.com/areas-of-practice/">international corporate tax planning Canada</a>.
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.
Acknowledge income that is tax-free. Some incomes have been considered duty free by most countries. This policy is established to make sure that the most international firms maintain their operation due to flexibility in taxation. Income that is gained overseas and home country is considered nontaxable, but the income should be maintained abroad. Any transfer made will be considered taxable through the transfer pricing policy.
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.
Check the transfer pricing tax. Companies that operate on international levels have cross-border transactions that help in maintaining efficiency in their operation. In that case, prepare a proper transfer pricing audit and support documents that show duty exemption. Such considerations will help you reduce the possibility of taxation risks and fines due to non-compliance.
Check the non-operating and other liabilities. Non-operating assets and liabilities are not subjected to taxation. They can be included in the total valuation of a company which subjecting them to taxation. Therefore, they should be recognized in the balance sheet to avoid such cases. These include land that is not in use, levy reserves, loan guarantees, and duty assets.
Consider investments made through subsidiaries. Subsidiaries are considered as corporate which have not achieved a full-fledged status. Companies that have invested in subsidiaries are subjective to being taxed but not like the fully fledged. They can be charged through historical financial information in item-to-item investment or using the equity method.
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.
You can get valuable tips on how to pick a tax accountant and more information about a professional who offers <a href="http://www.taxca.com/areas-of-practice">international corporate tax planning Canada</a> services at http://www.taxca.com/areas-of-practice now.
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