Tax Planning Services
Multinational businesses need to stay abreast with developments in International tax, legislation and regulations, because this is very important for successful business in today’s globalized markets.
Tax is a major concern for our clients, and there are possibilities of major savings which can be reached by using schemes that are structured and programmed rationally and perceptively having in mind international and national tax legislation.
Many corporations have a reactive attitude to imposition and management of their taxes rather than actively implementing a preventive methodology resulting in imposition of higher tax and as a consequence in lower income and returns on their business or their investments. It is therefore imperative to concentrate on mitigating tax exposure and minimising the impact of taxation in the business.
Tax planning consists of an initial analysis of the business and operations of a corporation, its organizational structure, its invoicing policy, its operational or manufacturing structure, and the use of these parameters to identify, from a financial perspective, the most tax efficient way to reduce expenditure and increase income and productivity. Therefore, tax planning establishes a baseline upon which the different parts of corporations should interact so as to minimize tax liability and maximise income.
Tax Avoidance
Tax avoidance is a perfectly legal vehicle with which a corporation may use a tax regime in one jurisdiction to its advantage by changing the tax exposure of that corporation and thus reducing the amount of tax imposed or paid. Benefiting from tax laws is also sometimes referred to as tax planning or tax mitigation.
These tax schemes generally use multi-jurisdictional structures in business operations that fall into commonplace tax avoidance by shifting the profit from high-tax to low-tax jurisdictions and jurisdictions recognised as “tax havens” that facilitate non-imposition taxes.
Corporations have always been finding ways to reduce their taxes. At the same time however, a reduction in tax revenues from corporation and pressure from individuals who were pay more taxes from their “hard earned” income bearing the largest portion of a countries tax revenue, have compelled tax authorities around the globe to adopt special measures against legitimate tax avoidance. Laws known as General Anti-Avoidance Rules (GAAR) prohibit “tax aggressive” avoidance and have been passed in several developed countries including Canada, Australia, New Zealand, South Africa, Norway, Hong Kong and the United Kingdom. These rules have been facilitated by judicial decisions e.g. the “business purpose” and “economic substance” doctrines established in the USA through the case Gregory v. Helvering 293 U.S. 465 (1935), and in the UK through the case Ramsay v. IRC [1982] A.C. 300. These rules do not make tax avoidance illegal, but they undo it by declaring that the scheme has no business purpose or is in violation of the “spirit” of the tax code. Notwithstanding the above, the United States Supreme Court has stated that “The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted.”
Consequently, careful and informed tax planning is becoming more and more significant in our days. In an ever more complex, dynamic and shifting tax environment, it is vital to receive designed tax planning advice which is unambiguous and understandable, inventive and commercially effective. This may include:
- Changing or establishing presence in another Country or changing the country of residence.
- Relying on double taxation provisions.
- Moving assets to legal entities (establishing holding intermediary or subsidiary companies).
- Exploiting legal vagueness in tax law e.g. business vs personal expenses.
- Using tax-free allowances and borrowing money.
- Setting up a gift or a loan trusts.
- Using Tax shelter investments e.g. in tax-exempt government bonds, pension plans individual retirement accounts or superannuation plans, provident funds, insurance plans, etc.
- Triangular trading, transfer pricing and re-invoicing from resale holding, management and administration companies.
Cyprus
Cyprus may not be a tax haven jurisdiction, but it is a white list low tax jurisdiction. For this reason, and the fact that free movement of capital is fully implemented, it is one of the most popular choices for international tax planning. It has a favourable tax regime [hyperlink tax regime in Cyprus] with many of double taxation treaties, and has excellent infrastructure [hyperlink why invest in Cyprus].
Using Cyprus in an international tax planning scheme allows benefitting from the favourable tax regime and offers many paths for efficient tax planning coupled with a reputable base for international business within the EU. This may reduce or even eliminate the tax liability of an international corporation by reducing:
- Tax liability in the jurisdiction where the income is produced.
- The amount of tax payable on dividends coming from the country where the income is produced.
- The personal tax liability of the beneficial owner.
- The overall tax liability of the international corporation or its Group.
Our Services
Our associated chartered accountants and auditors can give substantial and superior tax advice, whether in the context of large corporate financing transactions or innovative tax planning opportunities arising from new tax legislation.
Our associated experienced international tax consultants offer individually customised solutions that can be tailored to any specific need. Having in mind that every cross border transaction is likely to have a tax implication, which may result in unforeseen tax liabilities or missed opportunities for tax mitigation, our tax planning advisors and consultants shall provide you with the optimal solution by considering your specific needs and requirements. Such a solution may refer to tax avoidance, tax efficient international Group or corporate structure design formation and the usage of companies registered in several tax jurisdictions that are needed in order to mitigate your international tax liability and obtain the optimal benefit for your business.
Our expertise in the field of tax planning covers an extensive range of industries from services, to manufacturing and trading. Whether your transactions involve thousands or millions of dollars, proper tax planning and consultation can save you money, shelter you from tax penalties, decrease your tax exposure, minimize your expenses, and protect you from unexpected consequences.