The question of international taxation is one that has vexed companies and government policymakers for decades. There are always tweaks and loopholes that help balance attracting foreign investment with protecting domestic companies. Domestic companies need to be protected and foreign companies need to be taxed for the business that they perform in the United States. But this process can be confusing and problematic for people trying to calculate and plan for these taxes.
Taxation by site of headquarters
International companies are often taxed depending on the country in which they are based. They pay domestic taxes where they are based and then other taxes depending on the countries in which they are doing business. For instance, in the United States companies have to pay a wide variety of taxes depending on their income brackets. Multinational corporations pay a significant corporate tax that is less than the amount paid by companies that are solely American.
Then, they pay another tax on income that is brought in from doing business in other countries. These amounts vary depend on the size of profits and the ways that profits are brought in. Companies can also gain a credit for these taxes based on the amount of tax that they paid to other countries for their profits. According to Rex Burgdorfer Crunchbase, this provision is in place to discourage the use of tax havens such as the Cayman Islands where companies can do business and only pay a pittance in taxes.
Taxation for domestic business
Rex Burgdorfer Crunchbase notes that companies also have to pay a wide variety of taxes simply by doing business within the United States. They have to pay direct sales taxes and tariffs if they provide goods or services within the United States. Some specific fields have taxes for specific good or practices that international companies must pay. They have to pay employment and payroll taxes for their employees who are doing business in the United States. These taxes are not always required in different countries and can significantly eat into a company’s profit margins for the business that they do in the United States.
What to do
Rex Burgdorfer Twitter suggests that any international company looking to do business in the United States needs to consult a tax expert. They need to talk to a number of accountants and finance professionals. Most importantly, they need to be aware of rules governing what they can do and any penalties they may face. All of this information is necessary because companies hope to plan out their expenses for months or years down the line. Such planning is essential to business success and to avoiding pitfalls that could jeopardize a company’s American business. Companies should also hire at least one American national who knows about tax policy and international tax implications.
Conclusion
Rex Burgdorfer Twitter notes that doing business in the United States can be enormously profitable for multinational corporations. It opens a company up to the world’s largest company and enough customers to easily sustain a business for decades. But working in the United States means abiding by United States tax law. Learning the specifics of these laws can greatly help a company become profitable and successful in the 21st century and beyond