How International Taxes Impact Your Global Business

Posted on April 30th, 2018

As a company owner, it’s an exciting time when your business operations start to expand beyond your local community. However, it is important to stay mindful of the proper tax filing method when sales and purchases start to happen internationally.

Knowing the correct forms to file, when to file, and exactly what to report keeps your business in compliance. The expert assistance of a certified public accountant can help those running a company that conducts business globally ensure timely and accurate reporting to the Internal Revenue Service.

FATCA and FBAR Requirements

The Foreign Account Tax Compliance Act (FATCA) is a legislation that requires entities operating domestically to report foreign assets. When resources and sources of revenue are housed offshore, the company owner and the financial institutions they use are required to report any relevant information to the IRS. This important set of regulations requires that you file Form 1042 to avoid any unwarranted claims of tax evasion.

FBAR refers to Form 114, Report of Foreign Bank and Financial Accounts. This form is designed for taxpayers with over $10,000, or holdings of equal value, in foreign financial accounts. This report is separate from the standard IRS filing and is filed directly to the Financial Crimes Enforcement Network (FinCEN).

International Tax Treaties and Double Taxation

If you are a resident of a country that has a tax agreement with the United States and you earn income in the U.S., certain items might be exempt or taxed at a reduced rate. Certification may be required by the IRS or the foreign tax authority.

Regardless of whether you have a brick-and-mortar location in another country or routinely work with clients outside the US, it’s important to know what your tax obligations are. It is equally valuable to know if there are deduction opportunities that will benefit your bottom line. A dedicated CPA helps you decipher exactly how much in income tax you owe to each country that you’ve conducted business with during the fiscal year.

In some circumstances, a business owner may face being taxed by the country where income is earned, then again by their home country. Many of the international tax treaties were started specifically to help entrepreneurs avoid these issues.

Have Questions About International Tax? Contact Us Today!

At Corporate Accounting Services, Inc., Bruce Berndt and his dedicated team of accounting professionals help clients understand the impact of international taxes. We serve global business ventures with headquarters in Farmington Hills or any of the surrounding Metro-Detroit communities. To learn more, call today and set up a consultation.

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