4 tips to ensure you obey international tax laws
Your company is thinking about expanding its business to other countries, but is unsure if they want to make this move because of the international tax laws. Here are some tips to help ensure that if your company makes this move that they will be following internal tax laws.
Do your research. Every country has different tax laws for companies that are not local businesses. So if you plan on doing business in other countries then you need to know what their tax laws are. For example some countries do not require you to pay taxes or pay very little in taxes as long as you are only spending money in those countries. These places are known as tax havens. But if you decide to expand your business and start a production plant in these countries you would be subject to a higher tax.
Hire a CPA and/or a lawyer who is familiar with international tax laws. Because of how complex international tax laws can get it is better to have somebody working for you who understands the rules and regulations. These people can advise you on the best way to expand your business into foreign countries and what the tax benefits and penalties can be. For example if you are incorporated in the United States but want to move your call center to another country, you will need to know all about their tax laws because you will be paying their citizens wages or salaries to run your call center you will have to pay their government taxes and anything else that applies. While you can hire a CPA and/or a lawyer who knows about international tax laws you might also consider hiring an accountant and/or lawyer from the country you are expanding too. These people will know their countries tax laws better than somebody from the United States.
Make use of the Internal Revenue Services website and/or publications. If your company is incorporated in the United States but does business overseas you will have to pay taxes on any income your business generates overseas. The Internal Revenue Service's website can provide anybody with information about foreign income and how it is taxed in the United States. The website will also tell you if part or all of the foreign income is taxable, what type of foreign income is considered taxable, and what kind of tax breaks your company can receive for doing business overseas. This website is a great resource tool for businesses and individuals alike, if you have any questions that are not addressed in the website you can always contact the Internal Revenue Service directly to get further help.
Be sure that you or your accounting department understands different currencies and how to convert them to dollars. The foreign exchange rates vary daily and your team will have to keep current on what those exchange rates are. One way to help keep current on these exchange rates is to consult the internet for the daily rates. Also to help your company better understand international tax laws you should take part in seminars and continuing education that deal with international tax laws. Tax laws, whether they are domestic or international, change every year, new benefits are added and some are taken away, by providing your employees with an opportunity for continuing education and seminars you are helping them to stay current with the international tax laws.
Remember the best way to ensure that you are obeying international tax laws is to have knowledge about the subject.