International tax issues are no longer only the concern of major multinationals. They can impact all businesses with overseas connections, whatever their size. Cross-border tax issues are more critical to business than ever before, with significant consequences for the unwary.
It has never been easier to become an international business. Technological advances have opened up new routes to market for traditional businesses, and the digital economy presents opportunities for entrepreneurship like never before.
With these opportunities come tax complexities. Even those very familiar with the UK tax system can find the idiosyncrasies of tax in more exotic jurisdictions challenging. This is where RSM can help.
One area of difficulty that arises simply from normal trading is where customers withhold tax at source. This can come as a surprise, especially for businesses used to dealing only with UK customers. RSM has experience in resolving these issues, where there can sometimes be a tension between tax and commercial considerations.
For those with presence in other countries,the permanent establishment concept is key. This is where tax liabilities are triggered due to activities a business undertakes in a country where it is not otherwise established. Permanent establishments often arise without a business realising. If a business is unaware it has created local tax obligations, the compliance burden can often be disproportionate to any tax liability. RSM can help you evaluate your options and work through your risks in this area. Inadequately assessing your permanent establishment position may leave you liable to tax overseas as well as in the UK.
There is a common misconception that foreign taxes can always be offset against UK liabilities. Although this may be possible, the rules are complicated and credit should not be assumed.
International tax issues can also arise in areas such as:
- VAT and other indirect taxes;
- customs duties;
- payroll taxes; and
- withholding taxes.
The recent high-profile work of the Organisation for Economic Co-operation and Development (OECD) on reshaping the international tax landscape international issues is only going to become more prevalent. As part of the RSM international network, we can work alongside you to navigate these complexities.