Tax Planning and Compliance
Our in-house tax team will seek to legally minimise our Client's tax obligations, specifically
(i) preparation of annual tax returns
(ii) efficiently discharge monthly and quarterly government reporting, including VAT, GST, payroll
(iii) plan for legal tax exemption
(iv) practically minimise any administrative burden on our Clients
(v) utilise double taxation treaties
(vi) compliance with foreign controlled corporations
(vii) critically evaluate group structures for tax compliance efficiency.
It is essential that our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile, and fulfil these obligations.
Controlled Foreign Company (CFC) rules
■ A CFC is a corporate entity that is registered and conducts business in a different jurisdiction or country other than the residency of the controlling owners.
■ Several jurisdictions have tax rules to combat the use of low-tax overseas vehicles owned by resident individuals and businesses for the purpose of tax avoidance.
■ The 3 most prominent CFC regimes are by the United States, the United Kingdom and Australia.
Summary of how CFC rules work
■ CFC rules tackles problems such as tax deferral, base erosion and profit shifting.
■ It focus on either specific types of income, or companies in specific jurisdictions.
■ They work by attributing the income of the foreign company on the resident shareholder, thus increasing the taxable income of the shareholder in their home country.
US CFC rules
■ The United State's CFC regime affects US taxpayers who
- hold at least 10% of the shares or voting power in a foreign company, and
- who together with other US taxpayers own at least 50% of those rights.
■ The US does not maintain a whitelist or blacklist of countries. Instead, US CFC rules focus on certain kinds of transaction.
■ In particular, the US CFC rules includes certain categories of the following in their computation of taxable "foreign base company income":
- Dividends
- Royalties
- Capital gains
- Services performed for outside of the CFC's home jurisdiction (or on behalf of) related parties
- Sales to related parties.
■ The US CFC rules are contained in, and governed by, Subpart F of the Internal Revenue Code. Therefore, income attributable under CFC rules are often called "Subpart F income".
Tax audit
■ Typically carried out by the local tax authorities to determine whether an organisation or individual's tax return has been reported accurately.
■ Businesses holding funds in foreign bank accounts, late or non-filing of tax returns are more prone to tax audits.
■ In the event you receive a tax audit notice from the government, we strongly recommend that you contact us immediately. Our in-house tax team will be able to assist you in preparing a response to the local tax authorities within the stipulated deadline.
Types of tax audit
■ Desk audit: Conducted inside the office of the local tax authority in which your company is a tax resident. It will require you to clarify and explain your claims via written letters or emails.
■ Field audit: This is undertaken by the local tax authority at your office or appointed tax officer's office. In most cases, the local tax authority will contact your firm one to two weeks in advance to schedule such appointment. This form of tax audit is more time sensitive, and it is essential to engage an experienced specialist.
How Sidney Advisory can assist
■ In most cases, Clients receive a tax audit notice due to incorrect or inaccurate filing of taxes. Our in-house tax specialist will advise Clients on the tax audit process, as well as the relevant local tax laws.
■ Our in-house tax specialist will gather all necessary documentation such as
(i) financial statements
(ii) tax returns
(iii) tax computations
(iv) bank statements, invoices, receipts etc.
■ Our in-house tax specialist will conduct a tax compliance review prior to the audit. Thereafter, we will perform a procedural review.
■ We will also provide on-site support for field audits.