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Tax Planning

Related Content: International Tax Planning

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.


Know your Offshore Terms:


Citizenship and Passports

Many offshore persons need more than just residence in another country. Citizenship can be the critical problem—and usually a more difficult one—to resolve. The United States, for example, taxes on the basis of citizenship, and shedding U.S. citizenship may be a painful procedure. International tax planning can, in such cases, become a complicated exercise.

Purpose Trust

Generally, a trust is for the benefit of a natural person or established for charitable purposes. Some common law jurisdictions, however, may allow for a “purpose” trust, i.e. a trust established for a particular purpose which may or may not be charitable.

Constructive Trust

A constructive trust is a remedy that arises by operation of law where the legal holder of property would, for instance, be unjustly enriched if he kept the property, and where the interest should actually be transferred to or held for the benefit of some other person.

Transfer Pricing Calculations

Alternative methods, recommended by the Revenue or prescribed by the law, include: (a) the comparable uncontrolled price (CUP) method; (b) the resale price method; (c) the cost-plus method; (d) the mixture of basic methods; (e) the profit comparison; (f) the return on capital invested method; (g) the profit split method; and (h) the unitary method.
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