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Taxation of Companies

Companies face a number of tax issues.

Tax on the company's profit

The rules as to how much tax you will have to pay and how it is calculated vary hugely from place to place. Understanding them is critical if you want to do business in another country.

Surprisingly to people living in the main 'Western' countries, in many countries around the world many or most businesses pay little or no tax. Often, this tax is avoided in ways that are, quite simply, illegal. Of course, the local businessmen brehaving in this way will try to justify them but, often, they simply cannot do so. Ask whether they would disclose their position, in full, to the taxman. Listen to the silence!

Saving tax in this way is never a good idea. However, you cannot afford to just ignore the problem. If you are paying all of the tax required by law and your competitors are not, how do you compete?

The decision about what you are going to do about this problem is so important that it must be discussed, frankly, with your advisers right at the beginning of your business planning process.

Tax on capital gains made by the company

These are, in many cases, taxed as part of the income of the company for the year in question. Special rules often apply depending upon how long the company has held the asset from which it has made the profit.

VAT

Taxes relating to employment

In addition to the taxes on it's economic activites, companies that have employees will also incur tax liabilities as a result of those employees.

Social security

Technically speaking, social security and similar charges are not taxes but they look, feel and smell pretty much the same.

A company will incur substantial social security and other costs in relation to its employees.

Tax advice

It will come as no suprise if we tell you that taking good tax advice can save you a great deal of money.

There are two main types of tax advice.

The first involves how to arrange your company's affairs to reduce your exposure to tax.

The second involves making sure that, each year, when you submit your tax returns your company claims all of the allowances and deductions that it is possible to claim.

Tax advice does not need to be expensive. The cost, of course, depends upon the complexity of your affairs, but most of our clients can save a lot of money by virtue of a small amount of advice.

The lawyers, accountants and other professionals who are the members of The International Law Partnership Ltd. will be able to either to give you this advice themselves or to introduce you to other professionals who will be able to do so.

Please ask for detailed tax advice.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 8th February 2010.

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