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International Tax And Offshore Planning Database
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Tax Planning in General
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It is both lawful and sensible to arrange business and personal affairs in such
a way as to attract the lowest possible incidence of tax. The widening scope of
tax laws, the complexity of their provisions, and high tax rates make it more necessary
than ever for business enterprises and individuals alike to plan their taxable events
with considerable care.
For a commercial or industrial enterprise, an unnecessarily increased tax burden
represents a business waste that not only reduces its distributable profits but
may well make it uncompetitive.
In the case of an individual, the net return from personal endeavour and the investment
of capital is in most countries so severely reduced by the Revenue that the failure
to take advantage of potential tax minimisation benefits may have a considerable
effect on his spending power and accumulated wealth. The omission to anticipate
death duties and inheritance taxes will frequently cut an unnecessarily deep wedge
into his estate.
Offshore tax planning is tax planning in which factors involving more than one country
are included in the original database and an offshore element is introduced as an
extension of domestic tax planning.
The different ways in which two or more systems may be linked offer considerable
scope for tax minimisation or deferral, particularly where at least one of the countries
is offshore, since offshore does, by its very nature, generally refer to a better
tax deal in a foreign country.
On the other hand, where a project crosses frontiers, there are far more tax and
non-tax factors to be taken into account than in a purely domestic case. It follows
that offshore tax planning may often be exceedingly complex.
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The International and Offshore Database
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With the expansion of international trade and private foreign investment, it has
become increasingly necessary to have access to a database containing general information
regarding tax and business laws and practices in foreign countries. This need is
catered to by a number of publications and online services, which are of varying
degrees of accuracy, completeness, and speed of updating.
However, most of the available information is far from comprehensive, and it therefore
follows that one is dependent to a greater or lesser extent on second-hand information.
The difficulty of obtaining adequate information is aggravated in the case of countries
where administrative rulings (and even judicial decisions) are not published fully
and quickly, where the ultimate tax bill is subject to negotiation (especially where
such negotiation is open to graft), and generally where there is a contrast between
the printed word and actual practice.
One is thus frequently obliged to obtain advice from experts in foreign countries
involved in a proposed arrangement. Depending on the available documentation, it
may be desirable to seek such advice at the outset, during the course of the research,
or only at a much later stage for the purpose of controlling whether a possible
benefit or pitfall may not have been overlooked.
The database required for the design of an offshore tax plan consists of
- the facts,
- tax factors, and
- non-tax factors.
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Next - Planning Factors
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