Benefits of consolidating multinational taxes with one agency

Benefits of consolidating multinational taxes with one agency

Benefits of consolidating multinational taxes with one agency

Managing accounting and tax in your company is a complex task. It is one of the most critical business processes to manage, so there is simply no room for error. For organisations that operate in multiple countries within the region, regulations and compliance requirements can be even more involved.

According to Deloitte’s 2021 Asia Pacific Tax Complexity Survey, 80% of respondents believe tax regimes in the region have become more complex over the last three years.

For many tax and accounting executives, finding an international tax advisor in Singapore, Malaysia, Hong Kong or China, who can handle all your accounts at a local level is ideal. But this doesn’t happen for most organisations. At least, not from the start.

Instead, as companies grow organically, they might add offices across the Asia-Pacific region, each with different tax specialists to deal with their country’s specific needs. Perhaps this seems like a smart idea – after all, these specialists will have a deep understanding of the local tax regulations. But managing multiple specialists can quickly raise its own set of problems.

This is why many tax leaders in multinational firms find themselves grappling with:

  • Communication siloes: getting multiple tax specialists to coordinate their operations can be challenging, especially with language and cultural differences at play.
  • Staff turnover: the great resignation is upon us, which means as more employees are leaving, there are more people to train.
  • Technology challenges: each country has its own system and method of communication, which may not feed into each other.

If you are facing similar challenges, it might be a good time to think about consolidating your tax operations with an international tax advisor in Singapore, Malaysia, Hong Kong or China. This advisor can then help coordinate your tax efforts across the region while having one single point of contact, regardless of your base location.

Here is what you need to know about why to consolidate your taxes with one company, and how to choose the right provider for your business.

 

Do not underestimate the power of local expertise

The tax landscape in Asia-Pacific is constantly changing, with governments regularly introducing new regulations and laws.

This means partnering with a trusted tax advisor to help you navigate the complexities of local tax regulations is crucial for successful operations. Singapore itself has many complicated tax regulations, such as Goods and Services Tax (GST), which need expert local knowledge to understand. Also having a partner that can help you with certified tax planning, financial accounting, and compliance services will help during reporting season, allowing you to maximise tax incentives and benefits.

Choosing a global provider with local offices will give you a premium service at a regional level.

A reliable tax advisory service can also help you drive long-term success in your business by maximising your tax incentives and benefits. Without expert local knowledge, it can be easy to miss out on tax breaks and exemptions that your business is entitled to.

If you’re purely a Singapore-based business, managing all this in-house may be achievable. But multinational organisations need to deal with cross-border issues and any complexities regarding tax compliance that may arise. This can quickly become unmanageable if you don’t have the right partner to help you navigate through it.

So choosing an international tax advisor in Singapore who has connections in other countries, can significantly streamline this process and ensure the business continues to operate safely across the region.

One contact, or many?

When selecting a tax partner, check whether you’ll have a single point of contact or deal with different individuals in each country. If the latter is true, you may be no better off than you would with managing your teams.

Ideally, you want access to a connected ecosystem of tax advisors while only dealing with a single point of contact. That way, you get all the benefits of local tax expertise without the headaches that come with managing in-house teams.

Another important factor to consider when managing tax in multiple countries is dealing with cultural nuances. The Asia-Pacific region is home to a diverse mix of cultures, religions, languages and customs.

woman standing in front of her business team discussing tax compliance

Having people who understand, and can sensitively navigate, cultural complexities is an important part of doing business and maintaining a well-functioning team.

A dedicated international tax advisor in Singapore, Malaysia, Hong Kong or China, can help you to navigate all of these issues, and advise you on the best approach for each country in which you operate.

Tax compliance matters more than ever

As regulations tighten, tax activities are attracting more and more attention from authorities. No executive wants their company to be the subject of a tax compliance audit. At the same time, however, finance and accounting teams are under pressure to do more with less, as budgets and teams are scaled back.

Organisations are also dealing with a workforce in transition. Many employees are seeking a ‘next role’ that offers higher pay or better working conditions – reducing available resources and stretching teams beyond capacity.

Nevertheless, businesses cannot ignore compliance requirements. Singapore has some very strict tax laws, it’s critical that your company does everything it can to follow them by paying taxes correctly and on time. Any business that does not follow tax compliance is doing so at the risk of breaking the law.

Even something as small as overlooking a detail in tax law or inaccurately calculating taxes owed can result in non-compliance.

And maintaining compliance with changing tax laws can be particularly challenging for multinational organisations with business partners all over the world.

business meeting with six colleagues discussing tax notes international

Having a team of professionals that understands not only the tax laws in Singapore, Malaysia, Hong Kong and China but also those across the entire Asia-Pacific region, can free your business to focus on its core business. The team can help you to navigate the changing tax laws across the region, and assist you in adjusting your tax reporting processes accordingly.

And of course, if tax compliance issues arise, the team can deal with them swiftly and accurately.

But most importantly, having a trusted team to manage tax compliance services can ensure in-depth analysis of your business structure, before providing industry-leading advice on the best long-term tax solutions. After all, it takes skilled knowledge to structure your business divisions to understand and be able to take advantage of tax benefits.

Seek value with service

One of the biggest benefits of outsourcing your tax function is cost savings. ‘Time is money’, and increased efficiency can substantially improve your bottom line.

However, simply going with the cheapest option may be a false economy. When looking for a business tax advisory service, carefully consider their reputation in the market.

Here are some questions to ask:

  • How long have they been operating?
  • What is their client footprint?
  • How many staff do they have? And more importantly, how well do they retain their employees in the long term?
  • How solid is their track record? Do they have measurable results they can share?
  • How big is their regional and international footprint? Can they support your growing business?

To find an international tax advisor who satisfactorily answers all these questions, you will likely need to choose a premium provider.

The good news? Partnering with an established business tax advisory service gives you complete peace of mind that they will handle your tax matters efficiently, accurately and professionally.

Choosing a premium provider such as BoardRoom also means:

  • Low error rates: we have over 50 years of experience in the Asia-Pacific region and a proven track record of performance.
  • Fast service: we maintain high staff retention rates, so we always have the right amount of people to efficiently handle our clients’ needs.
  • Skilled staff: our staff are highly trained and keep up to date with changes in local regulations.

Think beyond where you are today

While planning for your current tax activities is crucial, any smart leader knows that planning for tomorrow is just as important.

If your business already operates in multiple countries within the Asia-Pacific region, you may be considering expanding even further. This means, of course, even more legal, compliance and cultural differences to navigate.

Therefore, it is essential to check with potential providers about their global capabilities.

For example, BoardRoom is part of Andersen Global, a worldwide network of tax and legal professionals operating in 315 locations. As such, we are well-versed in a range of international company taxation and tax planning issues.

In short, partnering with an international tax advisor ensures that wherever you grow your business, they have people on the ground to deal with the local tax regulations.

Look beyond just tax

When choosing a tax advisory service, it is also worth checking whether they handle other aspects of corporate advisory and management.

As your company expands, you will need to navigate the issues that lead back to the important issue of tax and tax compliance. You will also need to consider company incorporation and corporate secretarial services.

Partnering with a corporate advisory service that offers a full spectrum of corporate services, can help make expanding simpler. It is also more efficient, cost-effective and allows the business to focus on its core operations.

man with calculator tax compliance meaning

Streamlining your operations often becomes more important the bigger you get. Once you start to see the benefits of outsourcing your tax to a trusted firm, you may consider other areas in which they could help, such as:

If you decide to engage a full-service firm to handle your tax, they will already be familiar with your business structure, operations and working style. This will enable them to seamlessly move to support you in other areas of your business.

Cut the complexity by consolidating

When you consider the cost and effort of coordinating individual tax specialists across the region, the benefits of consolidating with one partner quickly add up. Having people with an in-depth understanding of the local tax incentives and benefits your company is entitled to can create significant savings each financial year.

But the benefits extend far beyond mere cost savings into making business simpler.

There is no doubt that tax complexity is on the rise. Having a trusted tax advisor to help you coordinate your growing operations within the Asia-Pacific region while navigating the changing regulations can reduce this complexity.

Speak to our tax experts today about how your company could benefit from consolidating your taxes with one partner.

Hong Kong 2022-23 Budget – Key Highlights on Tax and Business-Related Measures

Hong Kong 2022-23 Budget

Hong Kong 2022-23 Budget – Key Highlights on Tax and Business-Related Measures

Delivered by the Financial Secretary, Mr Paul Chan, the Hong Kong 2022-23 Budget was announced on 23 February 2022. The expansionary budget was curated to provide immediate Covid-19 support to its people and businesses and to achieve future economic growth as the country battles with its fifth wave of COVID-19 outbreak.

Some of the key highlights from this year’s budget includes new and extended personal and corporate tax incentives, business relief measures and long-term tax planning initiatives. As businesses make adjustments to their tax planning, BoardRoom has identified key highlights from the Hong Kong budget to help businesses minimise their tax charges and optimize their earnings.

Download our Hong Kong Budget 2022-23 Report for a concise summary about how these implications might affect your corporate tax planning.

Profit Tax
Other Business Relief Measures
business-relief-hong-kong-budget-2022
Stamp Duty Wavier
stamp-duty-hong-kong-budget-2022
Double Tax Treaty
tax-treaty-hong-kong-budget-2022

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Hong Kong Corporate Tax Guide: Improve Your Tax Planning

corporate tax planning

Hong Kong Corporate Tax Guide: Improve Your Tax Planning

Improve Your Tax Planning with our Hong Kong Corporate Tax Guide

Hong Kong is world-renowned for its business-friendly taxation and regulatory environment, with corporate tax rates that are considered some of the lowest in Asia.

However, some companies still pay more tax than they need to. Effective corporate tax planning maximises tax benefits while maintaining compliance. To help your company improve its tax planning, we have created a guide to corporate tax in Hong Kong.

How to pay corporate tax in Hong Kong

Corporate tax is known locally as ‘profits tax’ in Hong Kong. It applies to all profits (excluding capital asset sales) that are:

  • sourced in Hong Kong; and
  • generated by corporations, sole proprietors, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong.

For corporate tax purposes, no distinction is made between resident and non-resident companies. This means no tax is levied on profits arising abroad, even if they are remitted to Hong Kong.

The standard profits tax rate is capped at 16.5% for corporations or 15% for unincorporated businesses. However, a two-tiered profits tax rates regime applies, which lowers the rate on the first HKD 2 million of assessable profits to:

  • 8.25% for corporations; or
  • 7.5% for unincorporated businesses.

Assessable profits above HKD 2 million are subject to the standard profits tax rate.

Typically, the Inland Revenue Department (IRD) issues profits tax returns annually on the first business day of April. After calculating how much tax your company owes, file your profits tax return within one month of the issue date (subject to any extension applications).

When your company receives the IRD’s notice of assessment, you must pay a provisional tax. If your company ends up under- or overpaying your provisional profits tax, you can subtract or add the amount to your payable tax for the following year.

business tax advisory

Why business tax planning is important

Effective corporate tax planning is all about analysing your company’s finances to ensure that you pay the lowest tax possible while staying compliant. Prioritising tax planning is vital to your business success because implementing the right strategies could ultimately save your company thousands of dollars.

How your company could benefit from expert business tax advisory services

Navigating Hong Kong’s complex tax regulations can be challenging. Without expert tax accounting support, it can be easy to miss out on tax breaks and exemptions that your business is entitled to. The best way to maximise your company’s savings and deductions is to work with professional accountants who understand Hong Kong’s regulations.

Our tax experts at BoardRoom are not only well versed in local tax regulations but also have in-depth knowledge of international tax treaties. With their advice, your organisation can avoid any double tax issues. Moreover, our team will help you to apply for any extra tax incentives that could benefit your business.

Additionally, as your company grows, so too does the complexity of your tax reporting obligations. If you fail to meet your tax filing obligations, you may experience costly penalties. Our corporate tax accountants help countless businesses in all industries and sizes across Hong Kong and the APAC region to stay tax compliant each financial year.

Looking for trusted tax advisory services in Hong Kong?

Contact our taxation specialists today to discover how they could help your company stay compliant and maximise tax benefits.
We also offer a range of other corporate services all under one roof, including:

These make it easier for you to get on with business while we take care of the time-consuming, operational tasks.

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Hong Kong Budget 2021

Hong Kong Budget 2021

Hong Kong Budget 2021

On 24th February 2021, Finance Secretary Paul Chan announced the Hong Kong Budget 2021.

The budget suggests a targeted approach as the authorities focus on investing in infrastructure and promoting the development of industries in their bid to optimise strategies.

There is also a significant focus on digitalisation in this year’s Budget, further emphasising the importance of being digitally ready in today’s environment.

If you have any questions relating to any of the information contained in this report, please contact our tax advisors via email or call us at + 852-2598 5234.

Short-Term Relief
Hong Kong Budget 2021 - Short-Term Relief
Long-Term Measures
Hong Kong Budget 2021 - Long-Term Measures
Tax Relief
Hong Kong Budget 2021 - Tax Relief
Digitalisation
Hong Kong Budget 2021 - Digitalisation

Download the Full Hong Kong Budget 2021 Report

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Does your business survival depend on sustainable cost cuts?

cost-cutting strategies

Does your business survival depend on sustainable cost cuts?

Which costs to cut to secure your business future

Key insights

  • Cost-cutting demands a sustainable approach to operational efficiency and employee wellbeing
  • Efficient management of working capital supports a renewed focus on immediate, medium and long-term impact
  • Smart outsourcing with trusted partners sharpens expertise across critical operations

As the world waits on COVID-19 vaccines, business leaders are managing through a global depression with both the US and European economies continuing to threaten the Asian export market. This is the type of economic downturn that traditionally results in retrenching employees as an immediate cost-cutting measure.

However, the global and personal impact of the pandemic has driven a people-first approach to managing through this unprecedented economic downturn; every business has customers and stakeholders watching how they respond to market challenges to balance people and profit.

Leaders ready to do things differently can look to sustainable cost-cutting strategies to guide your organisation through change with reduced risk:

  1. Smart management of working capital
  2. Employee stock option plans
  3. Outsourcing payroll or improving processes
  4. Outsourcing finance, tax and accounting services
  5. Leverage industry grants and economic stimulus

By prioritising what drives value for your organisation in the long-term, sustainable cost-cutting strategies focus on positioning the company to survive now and to thrive through an economic recovery.

01 Smart management of working capital

Cash flow is critical in a crisis, and minimising investment in working capital — what we spend to get the job done and keep business running — is critical.

2020 has put the focus back on operational efficiencies — and effective working capital management. Growth and development may be temporarily on the backburner, but this is the time to get the business-critical functions of your organisation right. Containing costs to minimise reliance on lenders will position your business to recover strongly as economic conditions bounce back from an unexpected 2020.

A renewed interest in working capital demands a critical assessment of the entire sales pipeline; inventory levels, distribution points, and product viability are all on the table.

Smart leaders are looking at strategies, including:

  • proactive invoicing — offering customer incentives like early payment discounts
  • cash management — paying suppliers when they’re due, not before
  • inventory — lowering stock thresholds to reduce risk, but maintain agreed customer service levels
  • reducing overheads by outsourcing backend services.

Next steps: Assess your working capital costs and financial forecasts to confirm what you can bring inhouse and which backend services are smarter to outsource.

02 Outsource your payroll or improve your processes

Outsourcing backend services like payroll has a poor reputation as being the inevitable result of retrenchment, or a sign of instability. However, payroll processes are crucial to managing through an economic downturn; smooth payroll processes drive employee satisfaction, and it’s likely your HR department is busy by managing people issues in a pandemic.

There two ways to outsource payroll to streamline operations:

  • completely outsourcing the payroll function and services to an external provider
  • using a cloud-based SaaS HR management system (“HRMS”) — freeing up HR from administrative tasks by empowering automatic and self-service tasks.

The approach can also unlock unexpected benefits, and expose the significant opportunity cost of not outsourcing key functions; boosting visibility, streamlining internal processes, and staying compliant across multi-country payroll and tax conditions.

Each model can benefit their corporate objectives while managing costs, cross border functionality, and personal data privacy of employees.

Next steps: Check if payroll outsourcing or SAAS for payroll management suits your business needs.

03 Outsource backend financial support across accounting and tax planning

In an economic downturn, every organisation focuses on the very core of the business; the what and the why. It’s never been more important to have experts aligning your financial processes and procedures with your organisational goals. Your organisation can seek financial help with everything from bookkeeping to redundancy strategies to ensure the business runs smoothly while internal staff focus on business survival and generating revenue.

By choosing a financial services partner equipped to manage your operational and strategic finances and accounting, businesses bring external expertise and new perspectives on long-term accounting and tax planning.
Support for tax planning may include:

  • location planning for tax offset maximisation
  • streamlining cross-border transactions to simplify complex deals
  • minimising and deferring payments while staying fully compliant
  • strategic planning to leverage falling asset values.

An additional unexpected benefit of external support across accounting, tax and financial reporting is the establishment of effective data reporting, analysis and forecasting. This data helps to inform planning, working capital decisions, and support for your enterprise to apply for eligible economic grants and stimulus packages and ensure the governance is in place to stay compliant with funding conditions.

Next steps: Put all your financial operations on the table for expert review. Focus internal skills on long-term planning and get external support for tax, accounting and reporting.

04 Reward people with employee stock option plans

If you don’t have cash on hand but want to reward and retain employees look at an Employee Stock Options Plans (“ESOPs”).
As companies like Slack and Atlassian lead the way in remote-first workforces, competition for skilled employees demands a different way of approaching the employee experience. Employee equity plans have been popular during the COVID-19 pandemic as companies look for a different approach to boost employee engagement, maintain productivity, and keep intellectual property.

Create a purpose-built plan to fit your organisation and employee needs and create a sense of ownership to keep the best and brightest employed in the long-term. Your new stock plan — or updates to your current plan — should:

  • keep liquidity by creating long-term incentives to replace short-term cash bonus or salary increase expectations.
  • reward high performance and employees who increase operational efficiency during an economic downturn.
  • use performance metrics relevant to your organisation — look at total shareholder returns (“TSR”), client retention, and return on equity (“ROE”) and adapt goals to conditions.
  • drive growth by incentivising staff towards a common business goal.

Next steps: Look for an external provider who can manage your Hong Kong-based or global ESOP and keep the workforce focused on revenue-generating initiatives.

05 Access government and industry grants and economic stimulus

Since the unprecedented challenges of COVID-19, Asian markets have seen a new range of government, industry grants and other economic stimulus packages.

If your organisation operates across borders or is open to funding to expand operations, you may be eligible for funding support.

Support from government or industry grants demands stringent corporate governance; you may need a guide to accessing, implementing and leveraging new opportunities across borders.

Next steps: Get expert help to find Hong Kong support for enterprise and cross-border funding opportunities, apply for funding, and to stay compliant across jurisdictions.

How sustainable is your cost-cutting in 2021?

Cost-cutting strategies to manage through an economic downturn look different today to the Global Financial Crisis or the dot.com crash; leaders must balance short-term needs with long-term business survival.

It is no longer enough to reduce headcounts, freeze salaries, and scramble to maintain productivity. Smart organisations are taking a new approach to old problems: keeping employees committed with stock options over pay rises, looking for market and industry support, and getting smarter about the benefits of outsourcing.

The right outsourcing partnerships are key; who you choose to support your business can define your organisation and your leadership. Look for providers that support your workforce with administrative and financial expertise that drives business recovery.

Talk to BoardRoom about support for sustainable cost-cutting strategies.

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Economic Digest: One-Stop Corporate Services – Boardroom Caters to your needs