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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, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Brands

Samsung Launches Its Lastest Mobile Device, ‘Galaxy A04s’ in Nigeria

Samsung has unveiled its latest mobile device, the ‘Galaxy A04s’ in the Nigerian market

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Multinational electronics manufacturing company Samsung has unveiled its latest mobile device, the ‘Galaxy A04s’ in the Nigerian market.

The new device comes in various colors such as Black, Green, White, and Copper, and is packed with a 3GB, 4B RAM with 64GB and 128GB internal storage, Investors King understands.

The A04s also supports Dual SIM and is built with a glass front, plastic back, and plastic frame. It features a triple camera: 50 MP (wide) + 2 MP (macro) + 2 MP (depth) while on the front there is an 5 MP (wide) camera.

Samsung’s launch of this device reinforces the company’s commitment in providing affordable yet quality devices that address the daily needs of consumers.

Following the launch of its latest device in the Nigerian market, Managing Director, Samsung Nigeria Charlie Lee said, “Today is quite remarkable as we introduce Galaxy A04s, ‘The Eagle’. People want a device that is convenient, safe and affordable.

“They want a device that is a one-stop shop to enjoy watching movies, playing games and be productive at the same time.

“Galaxy A04s, another pocket-friendly mobile device from Samsung has been launched in Nigeria to edge out competition, ahead of other emerging markets.

“The Galaxy A04s is an impressive device at excellent value that builds on our growing Galaxy A Series portfolio”.

“With the Galaxy A04s, our customers can experience next-generation performance, demonstrating Samsung’s commitment to providing accessible devices without compromising on quality.”

Following the current economic situation ravaging the country, Joy Tim-Ayoola, HOD MX division added that Samsung through a pay small small scheme called Flex Pay has provided the opportunity for consumers to buy the device and pay in 3-12 months’ installment with as low as N11,000 per month.

She also stated that users of the device can also repair their screens for as low as N12,500 with no limits to frequency or time. Samsung’s launch of its A04s is coming a year after it launched the A03s in 2021.

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SMEs

FSDH Merchant Bank Receives Approval from AfDB for $25 Million Finance Facility to Support SMEs

African Development Bank (AfDB) has approved a $25 million credit facility for FSDH Merchant Bank to support Small and Medium Enterprises (SMEs) in Nigeria.

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African Development Bank (AfDB) has approved a $25 million credit facility for FSDH Merchant Bank to support Small and Medium Enterprises (SMEs) in Nigeria.

FSDH, which provides investment banking and security trading services, received a $15 million trade finance line of credit and another $10 million in loan transaction guarantee to provide loans for SMEs.

Following several limitations faced by SMEs in the country which have stifled their growth, the $25 million facility will enable FSDH to work towards ensuring the growth of SMEs by reducing the trade finance gap in Nigeria and ensuring the availability of funds for small and medium-sized enterprises (SMEs) in the industrial sector.

The Bank will also guarantee up to 100% of non-payment risks arising from letters of credit and similar trade finance instruments issued by FSDH under the guarantee portion. This will allow confirmation of trade transactions originated by FSDH, benefiting local import and export businesses.

Overall, the facility will catalyze more than $200 million of trade finance transactions across multi-sectors, including agriculture, manufacturing, and energy over the next three years.

Speaking on the recently approved funds, the Director General of The African Development Bank (AFDB), Lamin Barrow said: “The availability of trade finance instruments to drive post-pandemic economic recovery efforts cannot be overemphasized.

“Hence, the Bank’s financing will help eligible Nigerian SMEs to take advantage of existing and emerging opportunities in the domestic and regional markets.”

Also commenting is the Bank’s Director for Financial Sector Development, Stefan Nalletamby, he said, “We are excited about finalizing this facility with FSDH as having the Bank as a partner will aid FSDH in scaling up its trade finance offerings in Nigeria to help meet the ever-increasing trade finance gap.

“This partnership is expected to catalyze more than $200 million value of trade finance transactions across multi-sectors such as agriculture, manufacturing, and energy over the next 3.5 years.” 

The African Development Bank (AFDB) anchors its current Nigeria strategy on two pillars which are supporting infrastructure development and promoting social inclusion through agribusiness and skills development.

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Merger and Acquisition

Access Bank Plans Expansion Into Angolan Market

Access Holdings Plc has announced its planned acquisition of  a 51 percent majority equity stake in Angolan Bank, Finibanco.

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Access Holdings Plc has announced its planned acquisition of  a 51 percent majority equity stake in Angolan Bank, Finibanco.

Investors King learnt that Access Bank Plc is expanding its presence to Angola through the acquisition of a 51 percent stake in Finibanco.

The acquisition of Finibanco was disclosed in a filing to the Nigerian Exchange Limited by Access Holdings Plc.

Finibanco is a full-service commercial bank with over 20 branches and around $300 million in total assets in Angola.

According to Access Holding Secretary, Mr Sunday Ekwochi, the Angolan market as the sixth largest economy in Africa and the seventh largest country overall, with a vast and diversified natural resource base and a growing population, represents a strong potential for the bank’s growth aspirations

The Secretary further stated that the transaction is subject to regulatory approvals in Nigeria and Angola. The transaction is expected to be completed during the first half of 2023. This will however be subjected to customary conditions.

Access Bank has been on an acquisition spree since the beginning of 2021. The acquisition of a majority stake in Finibanco makes it Access’s sixth acquisition in the last 18 months.

In June 2022, it acquired a $37 million stake in Kenya Sidian Bank. Other acquisitions include African Banking Corporation of Botswana Limited, African Banking Corporation Zambia Limited, as well as Cavmont Bank.

Access bank is one of the leading banks in Nigeria. As a commercial bank, it operates through a network of more than 700 branches and service outlets, spanning 3 continents, 17 markets and 45 million customers.

The lending bank employs 28,000 people in its operations in Nigeria and has subsidiaries in sub-Saharan Africa and the United Kingdom. It also has a branch in Dubai, UAE and representative offices in China, Lebanon and India.

As at 31 March 2022, Access Bank had total assets of approximately US $28.8 billion.

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