International tax services

In recent years, the international tax landscape has become increasing complex. This is attributable to developments such as the implementation of the G20/OECD Base Erosion and Profit Shifting (BEPS) project minimum standards and best practices, heightened transparency requirements by governments on information disclosures and increasing adoption of unilateral tax measures for digitalized businesses, among others. For instance:

• BEPS: In line with the global rollout of BEPS changes and intensified tax enforcement, Chinese tax authorities have heightened their monitoring of cross-border arrangements and transfer pricing compliance. Intermediate jurisdictions used for investing into and out of Chinese Mainland have also been seeing significant rule changes, such as Hong Kong’s new transfer pricing rules and the new substance requirements in many Caribbean holding company locations. Consequently, businesses operating in China, both outbound and inbound, need to review existing or proposed arrangements to ensure they are robust and sustainable.
• Incentives: To boost inbound investment, the Chinese government has sought to make a series of improvements to the investment environment. In the tax space, these include deferral of withholding tax on dividends reinvested in China, improved access to tax treaty relief and more CIT incentives such as accelerated depreciation of equipment and enhanced R&D super deductions. In practice, existing multinational enterprises’ (MNEs) investments and operational structures may complicate accessing these treatments, calling for structure reviews and restructurings.

MNEs need to consider the opportunities and challenges arising from these changes and the best course of action.

Whether you are a long-established global player or newly venturing into cross-border investment opportunities, global tax planning requires thorough forethought and consideration. What kind of corporate structure is appropriate? Which operational model is more tax efficient? Where should intellectual property be located? How should global supply chains be configured?

Entity Formation:

• Design of tax efficient investment and financing structures
• Design of global business models, including for intellectual property and supply chains
• Comparison and selection of business locations, to access financial and tax incentives
• Advice on employee deployment arrangements and mitigation of overseas head office taxable presence risks in China
• Legal documentation review to ensure proper tax language

Operations and management:

• Effective tax rate evaluation of investment structures and business models
• Tax planning for business expansion and group restructuring/integration/consolidation
• Investment planning on foreign tax credit access, securing dividend withholding tax treaty benefits and dividend reinvestment CIT deferral
• Advice on profit repatriation strategies, preferential tax treatments, practical challenges and risk-mitigation measures, as well as relevant foreign exchange obstacles and solutions

Investment exit:

• Pre-sale planning regarding potential buyers
• Evaluate if current structure supports optimal exit and restructuring if necessary
• Tax implications of different exit options including share disposal/redemption and capital reduction
• Tax negotiations, tax filing and tax settlement for exit transactions

• Evaluate if the current structure and operation are optimal
• Design improvement action plans and conduct feasibility analysis
• Advice on tax implications of the operational improvement, including compliance with local tax regulations
• Legal documentation review and negotiations

• Regulatory, tax and foreign exchange compliance assistance for on-going global business operations
• Insights on trends in international taxation