Global Taxation Strategies

Global taxation strategies are becoming increasingly necessary for those looking to the get the most out of a globalized world. Whether you are a business or an individual, being smart about your tax position can save you considerable money. In recent years, it has become much easier to position yourself to take advantage of various taxation strategies. In this article, we will give a brief overview of how businesses have been able to use taxation strategies to save themselves billions of dollars throughout the past few years.

Transfer Pricing
If you run a business that operates internationally, you can use transfer pricing to help you get the most out of local taxation laws. Transfer pricing allows you or your subsidiaries to determine (within reason) where the profit is occurring on the service or product you are providing. This means that if you are transacting within your business, you can determine transactions within your business to make sure that they are as tax efficient as possible. Accountants can help you navigate this by preparing documentation that benchmarks your internal transactions to industry standards.

Assess Your Business Model
One way to take advantage of taxation strategies is to assess the way that your business operates. If you provide services online, you can normally headquarter your business in a jurisdiction with extremely low tax rates. Most online companies are registered in offshore jurisdictions with very low corporations tax. If you’re not providing physical services or products, there isn’t much point in your business being located in a high tax locale. Assess what close locations have low corporations tax and consider incorporating your entity overseas. This is also a great way to protect the privacy of your business and its directors.

Optimize Cash Flow
Another less well known benefit of taxation strategy is its ability to help you better maintain your cash flow. People with poor taxation management may find that paying their taxes prevents them from having necessary working capital to continue operating normally. By placing your tax liabilities in jurisdictions that better fit your seasonal gaps in cash flow, you can ensure that you always have the working capital you need to grow your business. Instead of changing your business model to adapt to taxation requirements, change your taxation requirements to do the most for your business. This can also prevent you from using costly financial instruments to maintain your company.

Play it Safe
It is important that you are fully aware of local regulations when you are operating in multiple tax jurisdictions. Do not assume that specific regulations are similar across borders – this can be a costly mistake that damages you or your businesses finances in the long run. If you’re a U.S. citizen you should be particularly careful – the U.S. government has attempted to prevent offshore activity by enacting strict foreign income laws. When properly done, international tax strategies can be highly advantageous, but make sure that you understand what you’re doing and how to get the most out of your specific strategy!

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