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.

Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

Malaysia Budget 2022

Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

On 29th October 2021, Malaysia’s 2022 Budget, themed “Keluarga Malaysia, Makmur Sejahtera”, was tabled by Finance Minister Tengku Datuk Seri Utama Zafrul bin Tengku Abdul with a wide range of tax incentives offered to both individuals and corporates. The expansionary budget is aimed to act as a catalyst to boost economic recovery and close the gap on the country’s fiscal deficit.

If you have any questions relating to any of the information contained in this report, please email our tax advisors via info.my@boardroomlimited.com or call us at +60 3 7890 4500.

Individual Tax Relief

Individual Tax Relief

New Corporate Tax Incentive

New Corporate Tax Incentive

New Sales & Service Tax Exemptions

Sales and Service Tax Exemptions

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Mitigating Costs in an Economic Downturn

mitigating_costs_in_an_economic_downturn

Mitigating Costs in an Economic Downturn

The onset of the COVID-19 pandemic along with efforts to contain it has plunged much of the global economy into a recession. In April, the International Monetary Fund’s World Economic Outlook (WEO) projects global growth to shrink by 3 per cent. However, its October publication amended the projection to 4.9 per cent. The impact of the pandemic will continue into 2021, where the WEO projects global growth to be at 5.4 per cent, which is 6.5 per cent lower than the pre-COVID-19 projections of January 2020.

Mitigating costs in an economic downturn-Growth projection

Looking forward, we can expect the recession to leave lasting scars despite the extraordinary efforts of governments worldwide to alleviate the situation through fiscal and monetary policy support.

During these unprecedented times, companies need to take affirmative action to mitigate risk amidst the economic downturn. Crafting recession strategies to retain or expand your customer base, learning to embark on affordable yet effective marketing or even taking this opportunity to review and better optimise business operations are all practical solutions businesses can explore. However, the immediate strategy for most companies would be to adopt cost-cutting measures.

In this article, we will share some of the most popular and effective measures companies can take to mitigate costs during an economic downturn.

Look to outsource

Outsourcing is when a company engages a third-party service provider to handle or manage a business function externally instead of choosing to manage the particular service in-house.

Of the numerous functions that exist in a company, payroll is perhaps the one that will offer the most significant benefit when outsourced during an economic downturn. By outsourcing payroll, your company can effectively improve its focus and expand its accessible talent pool, which are all essential to helping the company navigate through an economic recession. But most notably (and most beneficial during an economic downturn), outsourcing can reduce and control a company’s operating cost.

While the actual cost-savings of outsourcing HR and payroll services may vary between businesses, the most common areas where they could come from are:

  • Reduced payroll employees or headcounts
  • Elimination or change of existing payroll management software (often to something like a cloud-based payroll system that offers automation solution)
  • HR and payroll system updates
  • Employee training
  • Hefty penalties that are incurred when payroll mistakes happen

Outside of payroll, some of the most popular services that companies often outsource to mitigate and manage costs are accounting, administrative services (corporate secretary) and human resources.

Look to your accountants

During an economic downturn, it becomes imperative that you have experienced accountants to help you financially navigate through this challenging landscape. Beyond their capacity for keeping financial records, accountants can interpret them and provide you with a clear and succinct evaluation of the company’s current performance and financial position that could positively influence the outcome of any business decision during a recession.

Given their unique position and objectivity, a critical and core function of accountants on mitigating costs during an economic downturn is to uncover opportunities to eliminate unnecessary expenses and save costs. In areas where it is not possible to cut costs completely, your accountant can strategically advise on how payments can be deferred to maintain a healthy cash flow during difficult periods.

In addition to cutting cost, seasoned accountants can also analyse your business trends and provide effective forecasting. Such input is critical to helping you understand the changing performance of your business and assist with realigning projections, which can help you assess the viability of your current business plan and provide insights for new alternatives should the need arise.

Look at tax relief and economic stimulus packages

In an economic downturn, it is essential to monitor tax policy changes that can aid in providing financial relief for the company and improve cashflow. During such times, it is common for banks to begin cutting their interest rates while the government actively works to put forward spending and tax packages as well as offer administrative relief by extending tax-filing deadlines. Governments across the world might even introduce tax credits and tax cuts for companies that have experienced a significant drop in revenue.

Additionally, most governments would also roll out stimulus packages as part of their plan to spur their respective economies. However, it is worthwhile to note that in the long term, these governments intend to recoup the funds that were used to finance the stimulus packages and their plans could impact the bottom line of many businesses later. A likely course of action would be adjustments made to policies and tax rates, including but not limited to Corporate Taxes and the Sales and Service Tax (SST). Therefore, we strongly advise that businesses continually revise their tax plan in response to any possible policy changes to achieve greater savings and maximising any tax benefits.

As you embark on any tax planning efforts and find yourself lacking in experience or resources to do so adequately, it is a good idea to engage a professional. In doing so, you can ensure that your tax plan is continuously revised to strategically leverage every tax benefit, maximise tax deductions, and comply with the local tax regulation and statutory requirements.

Look at better managing your working capital

An economic downturn presents several working capital challenges for businesses across industries. To stay operational, companies must look for new ways to finance their working capital. According to the Hackett Group’s 2020 Working Capital Survey, organisations have focused on the availability of corporate debt as a source of working capital for too long. While this may be a common practice, it increases the company’s exposure to unavoidable risks, such as changing customer demands and disruption to the supply chain. During an economic downturn, these potential risks to your working capital could prove detrimental to the survival of the company.

Companies need to manage their working capital during an economic downturn effectively to mitigate cost through individual strategies that address their levels of debtors, creditors, procurement and inventory, and receivables process.

Mitigating cost and managing working capital in an economic downturn

Look at BoardRoom to help you through this crisis

During an economic downturn, when faced with numerous challenges, companies will naturally seek to hunker down and begin cost-cutting strategies. Such strategies are necessary, but it is also vital to note that even in crisis, there are opportunities. Companies will have to practice greater diligence and adapt to the changing landscape quickly through the adoption of forward-looking, growth-oriented plans that prepare the company for when the economy improves.

BoardRoom can help you through any recession period and prepare your business for the inevitable upturn. As a market leader in providing accounting, payroll and corporate services, our in-house team of dedicated experts can help to provide effective cost strategies regardless of your business size or needs. Our in-depth understanding and experience of economic trends will empower your business to discover and explore new opportunities.

Are you looking for a trusted partner and advisor as you weather this difficult time? We are here for you. Contact our BoardRoom outsourcing experts here!

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Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

Malaysia Budget 2021 - The tax highlights for Rakyat and Enterprises

Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

Malaysia Budget 2021 – The Tax Highlights for Rakyat and Enterprises

On 6 November 2020, Finance Minister Tengku Zafrul Aziz delivered the Malaysia Budget for 2021. The budget is anchored on three crucial goals – Rakyat’s well-being, Business continuity, and Economic resilience. The three goals are a continuity of the PRIHATIN, PRIHATIN SME PLUS, PENJANA, and KITA PRIHATIN stimulus packages. Find out more below as we summarise the key tax highlights for Rakyat and Enterprises in the Malaysia Budget 2021. For further details you can download our full report.

Corporate Tax

Key takeaways in relation to corporate tax cover the following areas:

  • Support for companies relocating their operations to Malaysia and undertaking new investments via tax incentives for both new and existing companies. This is an extension from the original incentives unveiled in PENJANA, however, the deadline for application has been extended until 31st December 2022.
  • New incentives added for companies who have Malaysia as their principle hub and a global trading centre.
  • Income tax exemption for Equity Crowd Funding to encourage alternate financing methods for technology start-ups.
  • Tax incentives for Maintenance, Repair & Overhaul activities
  • Preferential tax rate for manufacturers of pharmaceutical products
  • Extension of income tax exemption until YA2022 for export of private healthcare services
  • Simplify and merge the tax incentive for manufacturers of industrialised building system
  • Income tax exemption has been extended for both East Coast Development Corridor, Iskandar Malaysia and Sabah Development Corridor & Sustainable and Responsible Investments (“SRI”)
  • Tax incentives for non-resource-based R&D product commercialization activities will be reintroduced.
  • Tax incentives for commercialization of R&D product by public research institutions will be extended to private higher education institutions.
  • There were also a number of incentives released in relation to employment of senior citizens, ex-convicts, parolees, supervised persons and ex-drug dependents.
  • Income tax deduction on investment on ASNB wakaf fund
  • Extended implementation timelines for the Wage Subsidy Programme

Individual Tax

Several initiatives were released in relation to individual tax:

  • Reduction in income tax rate by 1% for the chargeable income band range of RM50,001 – RM70,000
  • There were also a number of incentives released across
    • Compensation due to job loss
    • National Education Savings Scheme
    • Education fees
    • Private Retirement Scheme contributions
    • Lifestyle expenses
    • Disabled spouse
    • Medical treatment
    • Employee Provident Fund (“EPF”) contributions
  • A special income tax rate for non-resident individuals holding key positions in companies investing in new strategic investments was announced
  • Amongst other incentives a flat 15% tax rate was announced for the Revision of Returning Expert Programme (“REP”)

Sales & Services Tax (“SST”)

The following initiatives were unveiled in relation to SST

  • Sales tax exemption for the purchase of locally assembled bus including air-conditioner
  • Increase of Sales Limit for Value-added and Additional Activities Carried Out in the Free Industrial Zones (“FIZs”) and Licensed Manufacturing Warehouses (“LMWs”)

Stamp Duty

The key takeaways from the budget in relation to Stamp Duty are as follows:

  • Stamp duty exemption of 100% for the purchase of a first residential home
  • Stamp duty exemptions for the revival of abandoned housing projects
  • Stamp duty exemption will be extended for 5 years for the purchase of insurance policies and takaful certificates for “Perlindungan Tenang”
  • Stamp duty exemption will be extended for another 5 years on the Trading of Exchange Traded Fund (“ETF”)

There were a number of other incentives announced around Indirect Taxes. Our full report covers these and the above highlights in more detail.

 

Download the full Malaysia Budget 2021 tax highlights here

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FAQs on International Tax Issues Due To Covid-19 Travel Restrictions

International Tax Issues Due to Covid-19 Travel Restrictions

FAQs on International Tax Issues Due To Covid-19 Travel Restrictions

The Inland Revenue Board of Malaysia (“IRBM”) has issued FAQs on 14 May 2020 to provide additional clarifications on international tax issues arising from travel restrictions imposed due to the global COVID-19 pandemic.

Some of the key salient points are as follow:-

1. I am currently outside of Malaysia because of COVID- 19 travel restrictions. How would my absence from Malaysia affect my residence status in Malaysia?

It will not affect your residence status in Malaysia. The period of temporary absence from Malaysia because of COVID-19 travel restrictions is considered as part of your period or periods in Malaysia for the purpose of tax residence. However, relevant documentations and records (e.g. travel documents, local authority travel restrictions guideline etc.) should be kept upon request from the IRBM.

2. My company is unable to convene a meeting of the Board of Directors (BOD) in Malaysia because of COVID- 19 travel restrictions. Will this have an effect on the company’s residence status in Malaysia?

If your company is not able to convene its Board of Directors’ meeting in Malaysia due to COVID-19 travel restrictions, the company will be considered as a Malaysian resident provided that all the conditions below are met:

  1. the company is a resident in the immediate previous year of assessment;
  2. there are no changes to the economic circumstance of the company; and
  3. the directors of the company have to attend the BOD meeting held outside Malaysia (either physical meeting or via electronic means) due to COVID 19 travel

Relevant documentations and records (e.g. board minutes stating the reason of directors were attending board meetings from their respective locations) should be kept upon request from the IRBM.

3. My company is not resident in Malaysia. Does the temporary presence of my employees or personnel in Malaysia due to COVID-19 travel restrictions lead to the creation of a permanent establishment in Malaysia?

Temporary presence of employees or personnel does not result in the creation of a permanent establishment in Malaysia, provided the criteria below are met:

  1. your company does not have a permanent establishment in Malaysia before the existence of COVID-19 travel restrictions;
  2. there are no other changes to the economic circumstances of the company;
  3. the temporary presence of the employees in Malaysia is solely due to travel restrictions relating to COVID-19; and
  4. the activities performed by the employees during their temporary presence would not have been performed in Malaysia if not for the COVID-19 travel

Relevant documentations and records should be kept upon request from the IRBM.

4. Before the MCO, I commute daily to Singapore from my home in Johor Bahru for work. Due to the MCO, I am temporarily working from home in Johor Bahru. Is my income taxable in Malaysia?

Your employment income from your employment exercised in Malaysia due to COVID-19 travel restrictions will be considered as not derived from Malaysia if the criteria below are met:

  1. there is no change in the contractual terms governing your employment overseas before and after your return to Malaysia; and
  2. this is a temporary work arrangement due to COVID-19 travel restrictions.

If any of the conditions are not met, normal tax rules will be applied to determine the taxability of your employment income for work done in Malaysia.

5. I am currently temporarily working from overseas due to COVID-19 travel restrictions. Is my income taxable in the current location?

If you would normally exercise your employment in Malaysia and is forced to work temporarily outside of Malaysia because of COVID-19 travel restrictions, you are regarded to be exercising your employment in Malaysia. The income is deemed derived from Malaysia and therefore, the income is still taxable in Malaysia.

You may be subject to taxation in the locality where you are temporarily present if no special tax measures for COVID-19 are provided by that locality’s tax authority. If you are in a state that has a tax treaty with Malaysia, you will not be taxable if you are present for less than 183 days.

6. I am a non-resident individual and currently working from Malaysia because of COVID- 19 travel restrictions.

You will be considered as not exercising an employment in Malaysia for the period of your temporary presence due to COVID-19 travel restrictions and have been working remotely from Malaysia for your overseas employer during your temporary presence in Malaysia if the conditions below are met:

  1. the period of your temporary presence is for a period of not more than 60 days; and
  2. the work you have done during your temporary presence is not connected to your assignment in Malaysia and would have been performed overseas if not for COVID-19 travel restrictions.
How we can help

As a committed tax advisor to our clients, we welcome any opportunity to discuss the relevance of International Tax Issues that your business may be facing. Find out more on our tax advisory services for more information.

Boardroom Limited is a well-established professional business service provider with a strong and reputable 50-year track record. Headquartered in Singapore, we are listed on the Singapore Exchange and ranked amongst Forbes Asia’s Top 200 Companies under a Billion. For seven years running, we have also been ranked in DP Information Group’s Singapore 1000. With our strong presence in the region, and a direct office presence in Singapore, Malaysia, Hong Kong, China and Australia, we are well positioned to support you.

Our smart business solution suite comprises of the following services:

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Due date for e-filing of Company’s Income Tax Return (Form C) extended to 30 August 2016 for companies whose financial year ends on 31 December 2015

Due date for e-filing of Company’s Income Tax Return (Form C) extended to 30 August 2016 for companies whose financial year ends on 31 December 2015

Due date for e-filing of Company’s Income Tax Return (Form C) extended to 30 August 2016 for companies whose financial year ends on 31 December 2015

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