Publication date: 11.06.2024
International tax planning: avoiding double taxation
International tax planning is an integral part of the activities of companies that conduct business in several countries. One of the key challenges in this process is to avoid double taxation, which occurs when the same income is taxed in two or more jurisdictions. In this article, we will consider the main aspects of international tax planning, ways to avoid double taxation and provide a legal opinion on these issues.
Double taxation is a serious problem for international companies, as it can significantly increase the tax burden and affect financial results. To solve this problem, countries conclude double taxation treaties (DTAs) among themselves, which regulate how and where different types of income should be taxed. Such treaties contain provisions on the distribution of tax powers between countries, methods of avoiding double taxation and dispute resolution mechanisms.
One of the main ways to avoid double taxation is to use tax credits or exemptions. A tax credit allows a company to reduce its liability in one country by the amount of tax paid in another country. Exemption provides full or partial exemption of income from taxation in one of the countries.
In addition, international companies often use transfer pricing to optimize tax obligations. Transfer pricing involves setting prices for goods and services transferred between divisions of the same company in different countries, with the aim of distributing profits according to the tax rates in those countries. For the correct application of transfer pricing, it is important to follow the rules of "market distance", which means setting prices at a level that corresponds to market conditions.
Avoiding double taxation also includes the use of special tax regimes and jurisdictions with low tax rates. For example, companies can establish subsidiaries in countries offering favorable tax conditions and thus reduce the overall tax burden. However, such actions must be carefully planned and comply with the law in order to avoid possible sanctions.
Obtaining a legal opinion is an important step in the process of international tax planning. A lawyer's written consultation will help to understand all the nuances of tax legislation in different countries and to develop an optimal strategy for avoiding double taxation. The help of a lawyer online can be especially convenient for companies doing business in several jurisdictions, as it allows you to get advice quickly and efficiently.
For successful international tax planning, it is important to cooperate with experienced lawyers who have deep knowledge in the field of tax law and international business. Consultation with a lawyer will help to avoid mistakes and ensure compliance of tax strategies with legal requirements.
In conclusion, international tax planning is a complex but necessary process for companies doing business in multiple countries. The main tools for avoiding double taxation are double taxation treaties, tax credits, exemptions, transfer pricing and the use of favorable tax regimes. Obtaining a legal opinion and a written consultation of a lawyer will help to develop an effective tax planning strategy that will meet the requirements of the law and minimize tax liabilities. Thanks to modern technologies, an online lawyer can provide the necessary assistance quickly and professionally, which significantly increases the chances of success in international tax planning.
