Suppose you seek to expand your business overseas and are based in Sydney. In that case, it’s advisable to consult with accountants in Sydney and carefully review the concerns outlined below and ponder the enquiries posed.
- What are your plans in relation to the expansion? Do you want to search for more talented people, access more cost-effective human resources, or want to tap into a new/niche market or specific demographic? Whether it will be a cost-centred or a profit-making operation, you need to work through your plan carefully and have a long-term view of how the expansion will look from a financial perspective – will it just break even or make a profit each year?
- Culture mix – what sort of culture does the overseas country embrace, and will this impact how you run your business overseas and locally? Do you have the right management team to lead and work with the people overseas – your team will need to have a good grounding and understanding of the local customs and operational practises.
- Will you need to send key staff from Australia to the overseas country, and what source of living and accommodation arrangements will the staff need? Depending on whether the stay will be temporary or long-term, the Visa and working rights of the staff will need to be assessed individually for each country.
- What are the legal and administrative rules governing the overseas country? Not all countries (i.e. Asian countries) have requirements like compulsory superannuation guarantees and worker’s compensation.
- Will your business seek to access Australia’s government grant called the “Export Marketing and Development Grant” (EMDG)? Click here to read more on EMDG.
- What structure will you choose– branch, company, trust or partnership? Tax implications of each structure will vary, and your decision will significantly impact how the operation’s income and profit will be treated.
- Here are a couple of key tax questions to ask your adviser when discussing the company structure:
- What is the applicable tax rate payable by the company on its profit?
- Is the company required to register for and charge GST/VAT?
- Are there any local shareholding requirements or restrictions? What type of entity can be a shareholder of the company?
- Are there any withholding tax or other tax issues you must be aware of if you are to pay or charge a services/management fee between an overseas company and an Australian company?
- Are there any transfer pricing issues in the overseas company?
- If the overseas company was to pay a dividend (net profit after tax) to its Australian tax resident shareholders, is there any non-resident withholding tax payable in the overseas country? If so, what is the withholding tax rate?
- Are there any mandatory auditing requirements in the overseas country? If so, what is the typical cost associate with conducting audits?
- What employee benefits or entitlements does a company have to pay its staff?
- What are the tax rates levied on salaries in the overseas country?
This is a complex area, and Stanley & Williamson, as part of the Kreston International network, can help you contact local expert accountants and tax advisors in over 100 countries worldwide. Please do not hesitate to reach out and contact us should you like to know more.
*Correct as of December 2014
*Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.