Legal support of clients on cross-border taxation issues
Entrepreneurial activity, spreading to international relations in the field of business, has led to the need for the introduction of international taxation. International cooperation between countries in the field of taxation is a key point in their interaction, this is due to the fact that many businesses are conducted in the territories of different states, which have their own system of taxation of business activities.
Doing business in the international space obliges the entrepreneur to pay taxes in a foreign country, and after the receipt of funds, for example, to business accounts in Russia, they also pay taxes to the budget of the Russian Federation. In fact, double taxation occurs, in connection with which, countries negotiate among themselves, conclude agreements and exclude double taxation. Such agreements are called international conventions, are concluded with almost every state and, in most cases, regulate the following issues:
- taxation in Russia if the tax is paid in another country;
- persons to whom such an agreement applies;
- kinds of taxes.
Depending on the country, the issues reflected in the agreement may differ or have their own additional options, but in most cases they are similar to each other.
It is important to note that for large companies that operate in different countries, international taxation issues are key, it is necessary to study taxation issues not only in their own country, but also in the countries in which they operate. In addition, it is also necessary to monitor changes in legislation on taxation, including in the event of a change in the political and economic situation in the country and the world. The introduction of additional restrictive measures for doing business in a particular country also affects international taxation.
An essential point in the field of taxation is also a situation in which there is a need for additional taxes in Russia. An agreement between countries on taxation does not guarantee entrepreneurs a complete absence of taxation in Russia, for example, when it becomes necessary to charge additional tax in Russia. Such situations arise when you need to deduct from the Russian tax the amount that has already been paid in another country, and pay the rest to the budget of the Russian Federation. There are a lot of subtleties of international taxation, it all depends on the terms of international agreements on taxation. At the same time, difficulties arise when there are no such agreements between countries, and entrepreneurial activity is carried on. This is where the need arises to attract additional companies that are open in countries with which such agreements have been concluded, these are the so-called offshore accounts.
At the same time, doing business in different states is accompanied by the inevitable emergence of disputes on taxation issues. To resolve such disputes, a mutually agreed procedure is used, which, in accordance with the Tax Code of the Russian Federation, is a procedure for resolving disputes about the procedure for taxing a person in relation to his income, profits and property when applying the provisions of the international treaty of the Russian Federation on taxation.
Also, when doing business in different countries, it is important to correctly maintain financial and reporting documentation, this is necessary in order to be able to prove to the regulatory authorities the payment of taxes in another country or to reduce the tax base. At the same time, there is no single standard for maintaining documentation; in each country, their requirements and evidence of taxation may be different. At the same time, it is also important to note that the beginning of the tax year in different countries may differ from the tax year in Russia.
The effectiveness of international taxation of a particular company depends on many factors:
- studying the current norms of law, including international, in the field of taxation;
- proper maintenance of financial documentation, including taking into account the requirements of foreign countries in which business activities are conducted;
- responding to changes in legislation or the political and economic situation in the country of doing business and the world.
Meanwhile, the dependence of entrepreneurial activity on political and economic processes in the country and the world remains very high, and crises make it possible to fully appreciate this. Given this, entrepreneurs need to competently build the company’s work on the issue of international taxation. This is due to the fact that liability for violation of tax laws will come not only according to the law of the Russian Federation, but also according to the law of the country in which the business is conducted. And often, the amount of fines for violation of tax laws in foreign countries can be much higher than in Russia.
Taking into account all the information about international taxation, entrepreneurs, in most cases, choose qualified third-party lawyers to conduct this area of business, who have experience and knowledge, can quickly and competently respond to changes in legal norms in changing situations and bring business activities in line with current legislation, both Russian and international.
- Advising clients on international tax issues
- Legal support of taxation of foreign economic activity
- Preparation of necessary documents in the framework of international taxation
- Representation of clients’ interests in dealing with international taxation issues