The import and export of goods can benefit your business.
The import and export of goods and services can raise financial and other issues, but it can also create opportunities to reduce the overall tax within an international structure.
Issues raised by the import and export of goods and services include:
- VAT has numerous issues with cross-border transactions, affecting the place of supply and therefore both the rate of VAT charged and the jurisdiction in which they are charged.
- As well as VAT, there can be other duties and levies raised on goods and services imported and exported.
- Exchange rate changes can create differences on the amounts invoiced and the amounts payable, resulting in taxable gains or deductible losses.
An international business structure can be set up to utilise the different tax rates in force in different countries. For example, the management of the entire structure could take place from a lower tax jurisdiction, and charges for the management services made to other group entities.
Likewise, if production or financing can be moved to a low tax area, then the internal pricing and lending can also create internal costs between group entities.
These strategies will effectively move profits within the group to the lower tax area, but care needs to be taken that the charges are not excessive, otherwise the transfer pricing anti-avoidance provisions could be enforced by HMRC.
Tax Innovations has extensive experience of international business issues. Our dedicated team of experienced tax advisors are ready to advise you on the tax implications and opportunities of your international business structure.