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How Corporate Tax Planning Strategies Reduce Liability and Improve Profitability

How Corporate Tax Planning Strategies Reduce Liability and Improve Profitability

Find out the essential elements for corporate tax planning strategies and how your company can make the most of them to reduce liabilities and improve profitability. Businesses and multinational entities must remain compliant with the law administered across all countries they operate within. Depending on tax agreements and arrangements between jurisdictions, this can make for a complex tax compliance burden to bear, especially for foreign companies unfamiliar with these markets. What is tax planning? Tax planning refers to the “arrangement of a person’s business or private affairs in order to minimize tax liability.” In its most basic definition by the Organization for Economic Co-operation and Development - OECD, tax planning refers to the “arrangement of a person’s business or private affairs in order to minimize tax liability.” Corporate tax planning focuses solely on the business element of this definition. On a more detailed definition, tax planning is understood as “the activity undertaken by a company or individual to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available under the law.” From these definitions, we can extract that tax planning has 2 fundamental premises. The first is that entities and individuals can develop activities aiming to reduce their tax burdens and optimize their profits. And the second, that said activities must always respect the appliable law. It is important to note that every activity aiming to optimize the tax burdens of an entity...

Explaining Developments in Digital Tax in Latin America

Explaining Developments in Digital Tax in Latin America

Economies in Latin America are changing rapidly. One important regulatory development for many countries in the region is digital tax, because it captures services delivered online or electronically. The OECD claims that Latin American economies are making real progress to address the tax challenges arising from the digitization of the economy. This international entity also expects that further digital tax developments in Latin America provides stability and certainty in the international tax system.  Managing your company while keeping a careful watch over new regulations is one of the challenges to overcome while doing business in Latin America.  We provide an explanation of digital tax developments in several emerging and developing economies in Latin America, so your business understands its obligations when offering digital services in these markets. Digital tax developments in Argentina  Latin American countries are adapting to a new digital age with the establishment of digital services taxes across the region. The Argentine government levied taxes for digital services under law 27,430 and on a general basis. This regulation includes services carried out through the Internet network or any adaptation or applications, platforms or technology used by the Internet or other networks through which equivalent services are provided. By their nature, these services are basically automated and require minimal human intervention, regardless of the device used for its download, display or use. The regulation of digital services in Argentina has been in place since 27...

New Law Improves Access to Tax Residency in Uruguay

New Law Improves Access to Tax Residency in Uruguay

In June 2020, a new decree was introduced to improve access to tax residency in Uruguay. According to Forbes, the country is considered one of the most favorable places to obtain residency and a second passport. Uruguay is characterized by being a country open to investment with a migration policy that provides a framework of public, legal and economic security for foreign nationals who decides to settle in Uruguay. On 11 June, President Luis Lacalle Pou announced Decree 163/20 in order to make the requirements for obtaining tax residency in Uruguay more flexible. A natural person who meets new eligibility requirements based on economic interest can obtain tax residency in the country. The Decree aims to stimulate investment on the premise of generating employment and improving social welfare for residents of Uruguay. Key points from Decree 163/20 to obtain tax residency in Uruguay According to Forbes, Uruguay is considered one of the most favorable places to obtain residency and a second passport. The new Decree outlines 2 key conditions to obtain tax residency in Uruguay: Investment in properties for a value greater than UI 3,500,000 (approximately US$370,000) made as of 1 July 2020, and an effective presence in Uruguayan territory for 60 days in the calendar year.Direct or indirect participation in a company with a value greater than UI 15,000,000 (approximately US$1,585,000) made as of 1 July 2020 and that generates at least 15 new direct jobs in a dependent employment relationship, hired from from 1 July 2020. Previous regulations for tax residency Previously,...

What are the Company Accounting and Tax Requirements in Guatemala?

What are the Company Accounting and Tax Requirements in Guatemala?

Whether looking for new investment opportunities in a country different from your own or planning to move your business to a new market, one of the first factors to consider is the foreign accounting and tax system. For those interested in expanding their business to Guatemala, companies or interested parties must understand all the accounting and tax requirements needed to operate.   To support your company incorporation and ongoing operations in Guatemala, be aware of and comply with the following accounting and tax requirements. Accounting regulations in Guatemala Be sure to have a full understanding of accounting and tax requirements in Guatemala. You may consider outsourcing this responsibility to ensure compliance. In January 2009, Guatemala adopted the International Financial Reporting Standards (IFRS) accounting regulations. However, it took the country a few years for its local professionals to receive the necessary training to apply them. Currently, the use of these standards is mandatory and generally known. International Financial Reporting Standards have a wide range of general and specific regulations for the labor industry, different lines of business, and possible operating risks, among other aspects. It is important to promptly identify the rules applicable to the business in which you want to invest, so they may be taken into account at the moment you must present your financial statements. This review must be carried out directly by the accounting/financial team in charge, together with the investor or, in the case of companies that are expanding,...

Biz Latin Hub Expands: Leading Market Entry and Back-Office Services in Guatemala

Biz Latin Hub Expands: Leading Market Entry and Back-Office Services in Guatemala

Biz Latin Hub is now offering multilingual and multidisciplinary market entry and back-office services in Guatemala. Guatemala has demonstrated consistently positive GDP growth since 2009, and serves as a strategic hub for businesses operating across the Americas. Growth in certain Central American economies in recent years has attracted a number of foreign companies to the region, especially those interested in manufacturing, technology, and establishing trade channels to both Northern and Southern markets. Within the region, Guatemala has demonstrated consistently positive GDP growth since 2009, and serves as a strategic hub for businesses operating across the Americas. In December 2019, the Global Entrepreneurship Monitor identified Guatemala as a country with high entrepreneurial spirit and Established Business Ownership. Biz Latin Hub’s Managing Director, Craig Dempsey, says, “as a market leader for end-to-end market entry and back-office services in Latin America, we couldn’t overlook the potential for international business community in this entrepreneurial nation.” “Guatemala is a top economic performer in Central America, and offers a number of incentives to help businesses thrive. We are excited to be able to support our clients entering this emerging market.” Explore our full range of market entry and back-office services in Guatemala Founded in Colombia in 2014, Biz Latin Hub now operates across 16 countries in Latin America and the South Pacific. With our team of legal, accounting, payroll and trade specialists, we can offer end-to-end support for foreign...

Changes to Bolivia’s Tax System During COVID-19 Response

Changes to Bolivia’s Tax System During COVID-19 Response

Understand key changes to Bolivia's tax system during the government's response to COVID-19. Importantly, deadlines for filing certain key corporate compliance documents have been deferred. Temporary measures aim to support businesses facing challenges with cash flows or having problems reporting their monthly and annual obligations In order to confront the consequences of the government's response to the COVID-19 outbreak, these temporary measures aim to support companies, small businesses and individuals facing difficult times with their cash flows or having problems reporting their monthly and annual obligations at the country's Tax Office (Servicio de Impuestos Nacionales). Find out these new deadlines and how your business may be impacted by these measures, and seek expert local accounting guidance to get support for your business during this time. Deadlines deferred in Bolivia’s tax system The government has announced a number of changes to Bolivia’s tax system to help the taxpayers affected by quarantine regulations in the country. Key relevant changes for businesses to take note revolve around tax declarations. The government has set the following deferred deadlines for tax declarations in Bolivia: Taxes and other obligationsRegular date for declarationNew date for declarationValue Added Tax (VAT)February-May 2020July 2020Transfer TaxFebruary-May 2020July 2020Income Tax Fiscal year 201929 April 2020 For taxpayers with fiscal year ending on 31 December 201929 May 2020  for Great and Main Contributors (GRACO and PRICO).31 July 2020 for taxpayers catalogued as...

Changes to Accounting Obligations in Ecuador During COVID-19

Changes to Accounting Obligations in Ecuador During COVID-19

Learn how Ecuador has modified some of its accounting obligations for companies due to the current situation and economic uncertainty facing the country. Ecuador, like many other countries, has been affected economically, politically and socially by COVID-19. However, despite the current situation and existing restrictions, companies operating in the country have continued their commercial activities and must comply with the accounting obligations established by the government. The Ecuadorian government has taken a series of measures and issued important resolutions on accounting obligations in Ecuador in order to support entrepreneurs and prevent them from going bankrupt. President of Ecuador Lenin Moreno has announced economic measures focused on outlining the financial steps to sustain business and the economy during the pandemic. Economic measures in place During the last months, President of Ecuador Lenin Moreno has announced economic measures focused on outlining the financial steps to sustain business and the economy during the pandemic. These measures include: US$4 billion reduction in public spendingThe single tax on vehicles with an appraisal greater than US$20,000 must pay a contribution of 5% of the appraisal value.Creation of a fund for loaning to small and medium-sized companies at 5% interest, with a 3-month grace period and a 36-month term.Merge the Ministries of Telecommunications and Transport Additionally, Lenin Moreno announced that Ecuador received an international collaboration for around US$60 million as exclusive funds to face the needs that have...

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