Tax planning and compliance is hard enough to do in your home country. When you begin operating in another country, it becomes even more complex. Questions invariably arise, such as:
- How should we structure our intercompany relationships?
- Where should we perform our R&D?
- Where should we hire employees?
- Can we shift income to a low tax jurisdiction?
- How much should we pay related entities for goods and services?
- Does withholding tax apply to intercompany transfers?
As a result of the desire of companies to shift income to lower tax jurisdictions by inappropriate pricing of related party transactions, almost all countries have instituted cost-sharing laws and regulations. The principal tax policy concern is that profits from a related-party transaction may be artificially shifted to low-tax jurisdictions through aggressive transfer pricing that does not reflect an arms-length transaction. Most countries retain the right to adjust the intercompany payment amounts if the taxing authority disagrees with the transfer pricing analysis used by the taxpayer.
Our international tax planning service analyzes your company’s current organization and its proposed operations in order to formulate a tax efficient structure. This tax structure takes into account, among other things, domestic and foreign country income tax rates, transfer pricing, controlled-foreign-corporation (CFC) rules, U.S. subpart f and PFIC rules and withholding tax obligations.