International Tax Planning Strategies for Entrepreneurs

international tax planning

Did you know that the number of national markets is greater than 200? This presents a supply of opportunities in international business that are seemingly endless. Additionally, there are a variety of international business formats. These include trade, importing, exporting, franchising, and more.

Considering how many opportunities there are, you might be interested in starting an international business as an entrepreneur.

However, if you don’t know how international tax planning works, you might feel stressed. How can you ensure that you’re complying with tax laws?

Fortunately, in this article, we’ll review the international tax planning strategies you need to know.

Finally, you can run an international business while using the right international tax planning strategies. Read on to learn more.

Prepare for Regulatory Changes That Are International

When you’re tax planning on an international level, you need to be aware of regulatory international changes. This way, you can ensure you’re complying with the newest international regulations out there. One of these is The Organization for Economic Corporation and Development’s BEPS initiative.

The BEPS initiative, or Base Erosion and Profit Shifting initiative, does two things. First, it creates taxation policies within the context of the digital economy. Second, it institutes a global minimum tax.

The EU’s Regulatory Changes

In addition to the OECD, the European Union is proposing CbC reporting requirements. CbC means country-by-country. The EU is also proposing an MDR. MDR stands for mandatory disclosure regime. Additionally, the EU is proposing a cross-border arrangements reporting directive.

The US’s Regulatory Changes

In the US, the Tax Cuts and Jobs Act of 2017 is going to have implications. These are still being worked out. These are implications that are specific to multinational corporations. The Department of the Treasury and the IRS are rolling out guidance and new rules regularly.

Countries’ Tax Agreements

A large number of countries have created tax agreements that they have with other countries. These agreements influence whether a company needs to pay tax in other places. They also influence how much a company would have to pay abroad.

These tax agreements are in place intending to address double taxation. Double taxation discourages international trade.

If you’re deciding where to open up a new business, you can look into this even before tax planning. This can help you determine where else you want to run your business.

For example, say there’s a country where you won’t have to pay taxes because you already pay them in another country. This country could be a good choice for where to run your business abroad.

Countries’ E-Filing Requirements

Something else to think about when you’re international tax planning for your company is the e-filing requirements countries have. In many countries, filing in this way is becoming required. Additionally, it’s a requirement that BEPS has.

This requirement BEPS has is specific to the documentation filings they require.

Do “What-If” International Tax Planning for Fees, Fines, and Penalties

When you make business decisions, there are often consequences that you won’t anticipate. This is particularly the case when it comes to the frequently changing and complex international tax law world. For this reason, you need to stop and think before you commit to a business decision.

When considering a business decision, you should think about what effects it will have on international tax obligations. These effects could include fees, unexpected fines, or non-compliance penalties.

To do this, utilize an international tax calculator each time you’re thinking of making a business decision. This way, you can see the “what-if” impacts.

This can be a great way to feel secure about the business decisions you make moving forward as an international company. However, if you want to be even more sure, you can hire an international tax planning services company.

Think About International Tax Strategies That Will Save You Money

Once you’re aware of how to follow regulatory changes that impact how you’ll do your international tax planning, it’s important to consider international tax strategies that will save you money. To get started, think about income shifting strategies.

The idea behind this strategy is that you’ll save money by transferring your pricing of intangibles and goods to low-tax countries. This is especially useful if you’re ordinarily pricing them in high-tax countries.

By making this switch, you’ll pay less in taxes. Of course, double-check to make sure that you’re following industry standards when doing this.

Another money-saving tax strategy is offshoring. When you follow this tax strategy, you choose to run your business within a no-tax jurisdiction.

This might even be the case if your operations are there and your business physically isn’t. If you’re offshoring, you can save on taxes as compared to running your business within a high-tax jurisdiction.

Keep in mind, however, that you must ensure that you’re complying with tax laws when doing offshoring. If you aren’t sure, it can be smart to speak with international tax planners or tax planning companies.

These planners and companies will also be able to identify other ways you could save money with international tax planning.

Want Help With Your International Tax Planning?

Now that you’ve learned about international tax planning strategies for entrepreneurs, you might want to get help with the complex processes involved. In this case, you should look no further than International Tax Consultants.

We’re experts when it comes to international tax planning. We also offer tax services, including tax resolution and tax preparation. To learn more about how we can help you, contact us now.

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