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4 Tax Planning Strategies for Your Global Business

One of the best parts about running a business is the flexibility that a global economy can afford you. In today’s connected world, we can run a company anywhere, allowing us to take advantage of international tax planning. 

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One of the best parts about running a business is the flexibility that a global economy can afford you. In today’s connected world, we can run a company anywhere, allowing us to take advantage of international tax planning.

However, companies that fail to implement strategic international planning are subject to pay high foreign taxes. This guide will cover the best strategies to manage customs, duty costs, and withholding taxes.

What Is Tax Planning?

International tax planning requires understanding offshore regulations to help you ethically pay the least amount of taxes possible. The best way to reduce a company’s tax burden is to hire consultants with a corporate accountant such as MI Tax CPA.

CPAs do more than file taxes for you. These experts devise a comprehensive plan by considering all the available codes and regulations to limit your liability.

With their expertise, CPAs can develop various strategies to optimize taxes for a global business. The four most prevalent strategies are below:

1. Foreign Credit

Foreign tax credits help to avoid double taxation by offsetting income from taxes paid abroad. The credit is for U.S. citizens who also have to pay income taxes in a foreign country. As a result, they receive a deduction in their U.S. federal income tax. You can utilize the money you’ve saved from foreign credits to scale your international business.

2. Tax Calculators

Business decisions may have unexpected consequences that can catch leaders off guard. Before expanding global sales, hiring international talent, or outsourcing work, consider the potential international obligations for taxes owed. Remember, being non-compliant can lead to unexpected fees and penalties.

Use an international tax calculator to ensure you understand any ramifications or outcomes that may come your way due to your business decisions.

3. Tax Havens and Offshoring

With many foreign countries looking to stimulate their economies, some countries have adopted tax-friendly policies. There are roughly 40 tax havens around the world. People have become more mobile, and many digital nomads and business owners relocate to countries with lucrative advantages.

For example, it’s possible for businesses to establish specific business functions in another country, such as call centers or manufacturing centers, to receive offshoring benefits. Additionally, the cost of goods, materials, and labor may be cheaper, allowing businesses to increase their profits.

4. Deferral

Paying taxes upfront can be costly and stunt the growth of your international business. Deferral is a strategy that allows you to keep more capital in your pocket and reinvest it into your business.

This strategy lets you defer taxes on earnings and contributions. For example, contributing to pre-tax funds like an annuity premium can reduce your taxable income. You still have to pay taxes once you take money from the fund. However, as interest accumulates over a longer time horizon, the taxes owed would be less than paying upfront.

Final Thoughts

Businesses that sell globally, have a foothold in another country, or outsource intellectual property abroad must abide by the foreign country’s jurisdiction. Systematic international tax preparation is the most effective way to reduce the amount owed to the government. These strategies can help ensure you comply with your business and home country’s tax obligations while giving you a competitive advantage in the global market.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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