TAX PLANNING FOR BUSINESS
TAX PLANNING FOR BUSINESS
(UK, EU & INTERNATIONAL)
Tax planning strategies are the bedrock of most multi-national companies often resulting in them paying single digit corporate tax rates on their worldwide income. It is of course possible to debate the fairness of the richest and most successful companies paying a fraction of tax paid by smaller companies. However, it should be note that countries such as the Netherlands and the UK deliberately set-up tax havens in their former or indeed current colonies combined with local tax dispensations to ensure that their multi-national companies had a competitive tax advantage.
‘SANDWICHES’ CAN SAVE YOU MILLIONS!
One of the functions of tax planning consultancy by firms such as SCF is to make available the tax planning concepts used by the multi-nationals to the SME sector. Of course, not every firm can avail of these but generally those firms with international aspects to their business can often legitimately and beneficially restructure their affairs. Examples of how this can be done are numerous but in general terms it often involves tax treaty ‘shopping’ and literally sandwiching functions between different jurisdictions. For example, it may be beneficial to park intellectual property in jurisdiction ‘A’ and license it out in jurisdiction ‘B’ or, for tax treaty reasons, have corporate administration carried out in a country such as the Netherlands were tax can be paid (albeit at the full corporate tax rate) on the administrative office costs and not on the profits it generates. Likewise, relocating production to low corporate tax jurisdictions with good tax treaty networks such as Ireland with its 15% corporate tax rate can be extremely beneficial especially if combined with efficient master IP and sub-licensing agreements. In summary, all firms with international operations should assess their tax efficiency to avoid potential trading disadvantages.
