International
Taxation

Whether you are expanding foreign business into Canada, or Canadian business to another country you should consult this decision with International Tax specialist, as there are many things to consider with this type of business decision.

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First of all, you need to know when and how will the income from that new branch be taxed. Sometimes it can be taxed in your home country, and sometimes it’s taxed in the destination country. Tax treaty agreements should also be considered as special rules may apply to your situation.

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Special consideration should also be given to compensation strategy and payout of dividends. Depending on the circumstances, there may be requirement for withholding taxes in one country, which often can be claimed as foreign tax credit in another country, provided everything has been properly planned and executed. Wrong decision could lead to double taxation which should always be avoided.

 

Another important area which should be consulted is transfer pricing. When two related entities have cross-border transactions, these transactions should be reasonable and properly documented. Otherwise, your business will be at risk of re-characterizing certain transactions, which can result in higher taxes, penalties and arrear interest.

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In addition to tax considerations, it is also important to understand the business law in each country/province where you are planning to expand. For instance, in Canada most provinces do not allow to incorporate with all directors being non-residents.

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Sales taxes should also be a key area of interest. Businesses with international operations must be aware when to charge sales tax and when it’s required to pay sales taxes. Certain types of businesses such as import/export companies for instance, may benefit from certain exemptions that allow them not to pay sales taxes on certain goods that are then exported to other countries.

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If you are in the process of developing plan for international expansion and require help of Tax Specialists that can assist with the above concepts do not hesitate to contact us. Our firm works together with specialists in all of the areas and will help you with all the steps required to successfully execute your expansion plans.