Milton Friedman was one of the most influential economists of the 20th century. He is widely credited for his role in defining capitalism as it is today. One of the things he is widely known for is his statement about the reason companies exist. He made the argument that companies exist for the sole purpose of maximizing profits. One way of maximizing profits is to reduce costs. In this article, we will look at the role of international tax planning and how companies can use it to maximize profits.
What is International Tax Planning?
Companies around the world are required to pay taxes. Governments use the tax that is paid to fund development. Different countries have different taxes. Therefore, wise companies incorporate their companies in countries with low taxes. This is more so in the European Union, which is the biggest free trade area in the world. The average tax rate in the European Union is above 22%. Therefore, many companies register their businesses in countries that have low taxes. Some of these companies are Romania and Cyprus. International tax planning is a process that is done by companies like Pagecorp Group to help companies reduce their tax burden. These companies do the following.
Advising Companies on VAT and other Taxes
The value added tax is a common tax in the European Union. All countries in the region have this tax that is added to most goods and services that are sold. A good tax advisory company helps other companies know the changes in value added taxes. It also helps them to price their goods in such a way that they pay little taxes as required by the law.
Cross border Tax Consultations
The amount of international trade is increasing. It is increasing more in the European Union, which removed cross border taxes. The role of this decision was to promote trade within the member states. It was also to reduce friction that existed before. However, there still exists cross border taxes when a company does trade with non-EU member states. A company like PageCorp can advise the company on how to address these taxes.
International Tax Structures
Over the years, the amount of tariffs have gone down around the world. This is simply because of the number of trade deals that have been done before. For example, there is a trade deal between the United States and Mexico. Therefore, a good international tax planner can help a company know these structures. It can also help the company know how to operate within international law.
International Mergers and Acquisitions
The number of international M&A is increasing. It is increasing simply because companies want to be bigger and to reach international markets. When this happens, the role of an international tax planning consultant is very important. It is necessary because the companies need to know the tax implications of the merger.
The past few decades have been dictated with the role of globalization. This role is so important because it has made it easier for people and companies to do business. Therefore, the role of international tax planning has never been more important. As a company, you need to get a company that has a good reputation and a good track record of perfprmance.