Australia’s entry into overseas business activities exposes the confusing world of international tax to every business owner. That is why when a business owner is making money abroad, managing this environment with the right international tax services becomes very important, Consequently, in order to figure out tax responsibilities, a number of criteria must be taken
What is international tax?
Traditionally, international tax was limited to the ‘big end of town’, however, with technological change and globalisation, even the smallest start-ups can have international tax issues.
International tax involves managing the tax burden from operating in multiple jurisdictions by taking advantage of available concessions, credits, exemptions or interactions under either:
- the domestic tax laws of the relevant jurisdictions; or
- An applicable Double Tax Agreement (DTA).
What is a DTA?
A DTA is a bilateral agreement between two countries aimed at preventing double taxation (or double non-taxation) by a resident of one country from sources in the other.
Whether you are:
- An Australian company expanding overseas;
- An Australian individual relocating overseas;
- A foreign company expanding into Australia; or
- A foreign resident individual moving to Australia,
how Australia’s domestic laws interact with the relevant foreign jurisdiction and the overriding operation of any applicable DTA is crucial in making informed decisions and taking advantage of any available concessions or exemptions.
Key international tax issues
There are a maze of international tax issues to consider depending on your structure, circumstances, transactions and activities, however, key among them are:
- transfer pricing (and whether Australia’s simplified transfer pricing documentation regime is available to keep compliance costs to a minimum);
- corporate tax residence and overseas-incorporated companies;
- dividend, interest and royalty withholding taxes;
- Australia’s thin capitalisation rules;