International tax planning.
In today’s world business is becoming increasingly international tax planning. Multinational corporations have been around for a long time, but in today’s time of globalisation and the Internet more often then ever medium and even small businesses are entering the international arena.
It is of a high importance for an international business owner to realise that different countries not only have very different natural, human and financial resources, but also radically different tax systems. And it’s not just about the rates, there can also be variances in the principles of levying taxes.
In addition to national legislation, tax issues in global commerce are regulated by international agreements between individual countries. Therefore, international tax planning is essential for the successful growth and development of your business.
International tax planning includes tools, methods, schemes such as offshore companies, trusts, foundations and other structures that you can use for the tax purposes in your business aiming for the lowest possible rate, or if it is allowed by the legislation, a zero rate. With the help of a set of measures, which are implemented based on the intelligent application of tax, civil and administrative laws of different countries, you can significantly increase the financial results of your business activities.
Different countries have different tax policies. It is obvious that a tax policy in Ukraine is different from China’s tax policy and receiving the same income, you will pay quite different amount of taxes. Thus, it is logical to put your income and base your office (to provide the infrastructure of their business) in the state where you will pay less tax. For the purpose of reducing taxes can be used companies operating in tax-free or low-tax regime. It can be offshore companies as well as companies from “normal” countries that enjoy certain tax benefits.
As offshore and onshore companies involved in tax schemes may be “conventional” companies, i.e., unspecialised organisations with a wide range of authorised activities, or they might target specific operations that often require a state license.
Thus, in international tax planning are widely used offshore insurance companies, offshore investment funds, offshore financial companies and even offshore banks. Besides companies tax schemes might involve more exotic entities such as partnerships, trusts , etc.