International tax planning

Many companies work not only for the domestic, but also for the international market. Such activities have an international character, which implies activities outside the country of the organization’s establishment. For international businesses, tax planning is especially important, because you have to take into account the legislation of several countries at once. Even without a carefully developed strategy, it is difficult to minimize the company’s tax payments when operating internationally.

International tax planning is a set of tools and methods that allow you to get tax advantages. This may be due to applying to offshore and low-tax jurisdictions, but such methods as attracting trusts and funds, and choosing the right organizational and legal form are no less in demand.

Tax planning considers many factors: the scope and specifics of the enterprise, the location of the main assets, and so on. One of the most effective ways to optimize tax payments is to choose a favorable jurisdiction. Currently, about 60 countries provide tax incentives for businesses, and at the planning stage, you can choose the optimal location for registering a business. But to do this, it is necessary to consider all aspects of economic activity.

Offshore and low-tax jurisdictions

Most often, to optimize the tax base, businesses resort to registering in offshore or low-tax zones. What is the difference between them? Usually, offshore companies are countries that provide registered companies that do not conduct business in them with full tax exemption in exchange for a standard annual fee. It is not necessary to submit financial statements in such countries. Classic offshore companies include, for example, Panama and the Bahamas.

Low-tax zones offer reduced tax rates for certain types of businesses. At the same time, the state requires the company to submit reports. This category includes, for example, Cyprus and Luxembourg.

However, there is also a third category that attracts high profitability. These States offer benefits subject to several fairly strict conditions. Such territories include, for example, Switzerland. However, when choosing a jurisdiction, it is often important to consider not only the registration procedure and the amount of taxes, but also the reputation of the country.

Advantages of international tax planning

  • Choosing a favorable jurisdiction for doing business. Planning is necessary at the stage of creating an international business. Thanks to this, you can initially choose favorable conditions.
  • Optimization of the tax burden. In other words, by planning, you reduce your tax liability using only legal means and methods.
  • Reducing the risks associated with payments to the country’s budget and funds. By properly organizing the work of the company, you will eliminate the possibility of claims from regulatory authorities. Otherwise, it will be possible that the tax Inspectorate of one of the countries will impose large fines on the company or initiate legal proceedings.

Tax planning plays an important role in the economic activities of any company that wants to enter the world market. VALEN specialists provide a full range of services related to international tax planning in Moscow and other cities of the Russian Federation. To consult or order a service, leave a request on the website, and we will call you back at your convenience!