Why multinationals are consolidating their taxes with one provider

Why multinationals are consolidating their taxes with one provider

Why multinationals are consolidating their taxes with one provider

When it comes to business operations, tax and accounting are two of the most vital and complicated responsibilities. Mistakes in these areas can have serious legal repercussions, so they need to be handled with a high level of accuracy. On top of this, companies that conduct business in multiple Asia-Pacific jurisdictions need to comply with all applicable local legislation – a complex task.

In Deloitte’s 2021 Asia Pacific Tax Complexity Survey, 80% of respondents said the region’s tax systems are more intricate now than they were in 2018.

Many tax and accounting professionals aspire to engage a full-service business tax advisory firm in Hong Kong, China, Malaysia or Singapore to coordinate all their accounts in each region. However, not all businesses take this option, especially if they have expanded rapidly or are new to the region.

In many cases, organisations begin a new tax management partnership each time they branch into a new country. It is a common occurrence, with service providers offering thorough knowledge of local tax rules and regulations. But managing multiple tax advisors can be difficult.

It is not unusual for tax professionals in multi-country businesses to come up against:

  • Complicated cross-border tax implications and treaties: different statutory and regulatory compliance requirements can cause delays, confusion and penalty.
  • Communication problems: variations in language and culture can make it hard to harmonise the activities of multiple tax partners.
  • Staff attrition: staff turnover is increasing due to the great resignation.
  • Technology differences: cross-border operations can be difficult due to regional differences in technology and communication.

Is your business facing these challenges? You may benefit from consolidating your tax management with a business tax advisory service in Hong Kong, China, Malaysia or Singapore. Wherever your company is based, an experienced tax services firm will provide you with a single point of contact, making multi-country tax coordination simple.

Read on to discover the benefits of consolidating your taxes with one provider as well as tips on choosing an appropriate partner for your business.

Local expertise is invaluable

Asia-Pacific governments regularly enact new corporate rules and regulations, and companies must stay across the changing tax regimes of each country they operate in.

An experienced tax advisor can help you satisfy all local obligations while successfully managing multi-country operations. The tax rules in Hong Kong can be particularly tricky to navigate, so the advice of a knowledgeable service provider is invaluable.

Tax breaks and exemptions can easily go unnoticed if you lack access to local expertise. Outsourcing your accounting and compliance functions to a third party professional will ensure your company applies for all tax benefits and incentives it is entitled to.

Seeking a reputable tax firm in Hong Kong that has solid connections in neighbouring regions will ensure your cross-border operations are executed with professionalism and accuracy, while meeting all statutory obligations.

Effective communication

Prior to selecting a tax partner, find out whether you will have one point of contact or need to communicate with multiple individuals in different regional offices. The second arrangement is undesirable, as you would need to navigate all the same issues that come with in-house tax administration.

The best business tax advisory firms connect clients with a network of tax experts via one contact point. This scenario provides you with access to quality tax advice and services without the problems that come with coordinating multiple teams.

Communication

The advantages of working with one unified team can also have significant financial rewards. Tax benefits and incentives are maximised across your business while errors, discrepancies and miscommunication amongst suppliers are reduced. Having one point of contact will also help you align your company goals on a global level, keeping consistency and reliability throughout your business.

When handling tax across several countries, you also need to be mindful of cultural differences. The Asia-Pacific region encompasses a variety of cultures, traditions, religions and languages, so it is important to engage a trusted tax firm that can guide you through cross-border business with sensitivity and success.

A highly trained international tax advisor in Hong Kong, China, Malaysia or Singapore will be able to help you adapt your working styles to suit specific Asia-Pacific locations.

What is the meaning of tax compliance?

Authorities across the Asia-Pacific region are paying closer attention to corporate tax activities as rules and regulations tighten. No business wishes for a tax compliance audit, so understanding tax compliance meaning is imperative. Finance and account staff are required to work harder with fewer resources as budgets and employee numbers decline. This adds pressure to your internal teams as they navigate Hong Kong tax compliance.

A changing global workforce presents an additional challenge for businesses: teams and resources are frequently pushed thin as employees hunt for new jobs that offer better salaries or wellbeing programs.

Regardless, legal obligations must be followed. Companies must strive to comply with Hong Kong’s strict statutory requirements by keeping up with all tax payments. Non-compliance can have severe legal consequences.

Failure to comply can be due to a small mistake, such as overlooking a detail in statutory documents or miscalculating debts.

Ensuring adherence to changing requirements can be extra difficult if your company has business partners across the Asia-Pacific region and the world.

Compliance

When you partner with an established third-party provider that understands local tax requirements in Hong Kong and throughout the wider Asia-Pacific region, your key decision-makers will have more availability to focus on company expansion. You can enjoy peace of mind, knowing that your tax administration is compliant with evolving local laws, as well as being reported correctly and on time.

If any compliance concerns emerge, your tax partner will be able to respond quickly and capably.

Top-tier service providers undertake a comprehensive analysis of your business structure, prior to giving advice on tax administration and future planning. This approach enables your teams to take advantage of tax benefits for your business in the long term.

Selecting a premium tax advisor

Handing over your tax administration to a reputable third-party provider will save you time and money: the efficiency of your teams will improve, increasing your profitability as a result.

When it comes to taxes, cost considerations are crucial, but selecting the cheapest service provider is rarely a good move. A firm’s track record will provide a good indication of the kind of service you would receive.

It is important to ask potential tax advisors questions like:

    How large is your client base?
    How long have you been running?
    What have you achieved in the years since you opened?
    What results have you delivered for clients?
    Do you operate in multiple regions?
    Can you support my business as it grows across borders?
    What is your staff retention like?
    Do you have many long-term employees?

    If the tax services firm you are considering provides confident, positive answers to these questions, it is a good sign their performance standards are high. You can have faith they will coordinate your taxes with skill, efficiency and professionalism.

    With sought-after providers like BoardRoom, you will enjoy:

    • High accuracy: BoardRoom has a strong 50-year history of reliable service and a reputation for quality.
    • Personalised service: due to low personnel turnover rates, we always have experts on hand to promptly and properly service your needs.
    • Superior knowledge: our highly trained professionals have an in-depth understanding of local legislative landscapes across the Asia-Pacific region.

    Branch out with confidence

    It is important to ensure your present tax activities are in check, but looking ahead to your business’s tax management in the years to come is just as crucial.

    Are you already operating in multiple countries across the Asia-Pacific region? If so, you may be planning to expand into additional regions. As part of your planning, be sure to factor in the extra statutory requirements and cultural nuances you will face.

    This is why global expertise is so important when it comes to selecting a specialist tax services provider.

    As an example, BoardRoom partners with Andersen Global, a network of tax and legal professionals operating in 315 locations worldwide. Our international relationships strengthen our knowledge of cross-border corporate taxation issues.

    Entrusting your taxes to an international provider guarantees you will have the specialised legal counsel you need to expand and prosper.

    The advantages of outsourcing multiple functions

    When comparing potential advisory firms, find out whether they are able to handle several business functions alongside tax.

    Company incorporation and corporate secretarial services are closely connected to tax management, and professional administration of these functions is necessary for successful expansion. Opting for a full-service firm will save you money and time, which allows you to channel more resources into growing your business and achieving your main goals.

    As businesses expand, efficiency becomes all the more important.

    Outsourcing

    Outsourcing several responsibilities to one service provider is a wise move because they already have a strong grasp of the way your business operates. They will be able to provide assistance in a range of capacities with very little hassle.

    Enhance productivity through consolidation

    Consolidating several corporate responsibilities with a single tax advisory firm has many benefits – particularly when you think about the money and time required to liaise with multiple firms throughout the region. You will enjoy significant yearly savings, especially if your partner can identify and apply for all the local tax breaks and incentives your company is entitled to.

    Premium tax outsourcing will lead to faster and smoother processes in many areas of your business.

    The task of tax administration only grows more complex. That is why engaging a skilled tax services provider is important to support your growth and ensure compliance with local statutory requirements as they evolve.

    Interested in consolidating your company’s tax functions with one service provider? Reach out to our tax team today.

    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