International business trade can create overseas and UK tax issues.
There are many legislative and tax issues to be aware of, both overseas and in the UK, if your business starts to trade internationally.
UK resident businesses are generally taxable in the UK on their worldwide income or profits; however, the tax authorities in the overseas jurisdiction may also claim the right to tax the profits arising in their country. In order to prevent the same profits being taxed twice, there are a series of double taxation measures, together with anti-avoidance provisions to prevent the double-taxation measures being used to avoid tax.
Double Taxation for International Business
There is a global network of double taxation treaties (DTTs) between the UK and other countries, which set out which country has the right of taxation of profits that are treated as taxable in both countries. Often, the country of residence for the business takes precedence, but this may not be the case for certain types of income, or profits of an overseas permanent establishment. The DTT may also allow some taxation by the other country.
Further to these DTTs (or where one does not exist), the UK offers unilateral double taxation relief (DTR), whereby the UK taxpayer is given relief for the overseas tax they have suffered on the overseas income, up to the amount of UK tax.
International Business Anti-Avoidance Measures
Anti-avoidance measures include legislation regarding transfer pricing, thin capitalisation and controlled foreign companies, as well as the general anti-abuse rule.
International Business Tax Advisors
At Tax Innovations, we have many years of experience in dealing with international aspects of business and double tax treaties. We can help you to ensure that you do not create an overseas structure that results in higher taxation and can advise on how to avoid creating an overseas tax presence in the first place.