International tax law is a complex web of regulations governing the taxation of global income and activities of businesses and individuals. For any business owner working in more than one country, knowing the ins and outs of these laws is essential. Absent such knowledge, the business is exposed to the real risk of being found out of compliance, having its operations and tax results recharacterized, and incurring costly penalties. MAG Legal Services has a global practice that concentrates in the field of international tax law.
Cross-border business activities and investments are taxed according to international tax laws, which are a set of rules and agreements between countries. Business owners must comprehend these international tax laws for several reasons:
Compliance:
Strategic planning:
Cost optimization:
Business owners should grasp these fundamental concepts if they wish to navigate the complex world of international tax law with any degree of effectiveness.
Tax Residency
"Tax residency establishes which jurisdiction has the primary authority to tax the global income of an individual or entity."
Tax residency rules differ among various countries but typically take into account things like:
how long you've been present in the country
where your place of business is
where the focal point of your entity's management and governance is.
Permanent Establishment (PE)
A PE is a set place of business that activates a tax presence in a foreign country. Instances include:
Workplaces
Manufacturing sites
Satellite offices