International Tax Planning Strategies for Multinational Corporations

Global companies face the challenge of international tax planning due to the complexity of tax laws and regulations in each country in which they operate. To avoid international double taxation and ensure compliance with local laws, strategic tax planning is essential. The Organization for Economic Cooperation and Development (OECD) coordinates policies for international tax management among its member countries, including a global minimum tax and stricter documentation requirements for transfer pricing. In this article, we outline the top four tax planning strategies for multinational corporations.

First, prepare your company for ongoing international regulatory changes, such as Base Erosion and Profit Shifting (BEPS) initiative policies for taxation in the digital economy and the EU's proposed country-by-country (CbC) reporting requirements. Upgrading your tax technology can help you ensure greater transparency and control over your tax data.

Second, inform yourself about the new BEPS rules, which include 15 actions that tax teams must stay ahead of. Analyzing your company's risks around reporting regulations will help you develop a strategic plan and ensure compliance with evolving regulations.

Third, prepare for the global minimum tax of 15%, which introduces a global minimum tax and includes three rules that will apply to companies with €750 million+ in revenues. Streamlining your management and reporting processes with dedicated CbC tax reporting and analytics software can help ensure consistent compliance.

Finally, perform "what-if" planning for penalties, fines, and fees before making business decisions. International tax calculators can help executive teams anticipate the effects of their decisions on international tax obligations.

In summary, international tax planning is a complex task for global companies that can be facilitated with the right technology and strategic planning.