Expanding to Overseas Markets, Tax Strategy

[mslodyczka]

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Hello Everyone, first post here

We have a business selling consumer goods imported from China and distributing around AU. We’re looking to expand into overseas markets in the near future, starting with NZ and later possibly into EU and USA.

We’ve toyed with the idea of setting up a HK subsidiary to route NZ (and other out of country) sales through. If profits made by said HK company are never repatriated back int AU (IE used to fuel further expansion in worldwide markets) would they be taxable in Australia?

I realise that this is obviously quite a complex question and the main reason for posting, apart from generating some discussion, is to potentially get in touch with a Tax Strategist to discuss further.

Cheers,
Maciek

[Dave Gillen – Former FS Concierge]

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Welcome aboard Maciek!

Great to have you here, and hopefully your post attracts the right person for the job.

Dave

Dave Gillen | LinkedIn

[mslodyczka]

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Hi Dave,

Thanks for the warm welcome. I hope so too Cheers!

[NickKaro]

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Hi Maciek

You are right in saying this is a little too complex to provide advice on via this forum.

Feel free to send me an email ([email protected]) if you would like to set-up a time to discuss.

Regards
Nick

[mslodyczka]

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HI Nick,

Thanks for your offer, I certainly will be in touch with a professional we we get ourselves sorted out a bit more

Was just hoping for some very general discussion here, would look forward to further input from people who’ve been in similar situations / are familiar with this kind of thing.

Cheers!

[Anonymous]

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Hi Maciek,

You’ll find that our resident tax experts are only able to give general advice in a forum environment, so will probably need to chat with someone one-on-one to get the info you’re looking for.

It sounds like exciting times for you and your business – I hope it all works out well,
Jayne

[Jman]

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Hi Maciek,

Firstly, I’m not (nor will I ever be) an accountant, and as others suggest, international tax is highly complex, so before making any firm decisions, you should get well qualified advice… Worth noting that this isnt that easy to find either.

I started my business 6 years ago in Aust, and have expanded into the US and UK with dedicated offices in these locations.

If you are looking to restructure your business for international operations, you may want to think about the parent company being in the most advantageous corp tax jurisdiction. Ideally your profits are centred there, and therefore you will retain hirer earnings to re-invest into the whole of your business.

Be aware though, there are no shortcuts, you must report earnings, legitimate cost sharing on arms length basis etc. Any income/dividends you personally earn worldwide are still considered in your personal income and taxed under Australian law. On that point, you need to ensure there is a duplicate tax treaty in place to ensure you aren’t double taxed/you receive franking on dividends etc.

International structure, incorporation, regulatory filings, accounting etc is all quite expensive – so again worth getting advice and considering if it will be advantageous to your bottom line long term.

Look for an accountant with specific international taxation experience in the jurisdictions you wish to operate in.

Good luck!

[mslodyczka]

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Hi Jman,

Congrats on the success of your business mate.

Thanks heaps for your reply. Well noted the advice about getting professional advice, no doubt will be consulting the services of a professional before making any official steps forward.

Can you divulge if you have a parent company in a ‘tax haven’ or if that is something you didn’t want to explore (like HK)?

Also, would you be willing to PM me the details of your accountant? As you say someone good isn’t the easiest to find.

Thanks again.

[Author]

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