International tax should not be overlooked by UK SMEs that transact cross-border. Withholding taxes may be suffered in respect of foreign sourced income which may not be fully recoverable. This can create an absolute cost which must be considered when pricing a contract. Overseas activities could lead to the risk of creating a permanent establishment resulting in tax liabilities and filing obligations. Jurisdictions take different approaches in defining a PE, which means the UK SME must review its position on a country by country basis. Sales tax and employee taxes can also be an issue and ensuring compliance with local rules is vital.
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International tax should not be overlooked by UK SMEs that transact cross-border. Withholding taxes may be suffered in respect of foreign sourced income which may not be fully recoverable. This can create an absolute cost which must be considered when pricing a contract. Overseas activities could lead to the risk of creating a permanent establishment resulting in tax liabilities and filing obligations. Jurisdictions take different approaches in defining a PE, which means the UK SME must review its position on a country by country basis. Sales tax and employee taxes can also be an issue and ensuring compliance with local rules is vital.
If you are not a subscriber, subscribe now to read this content.
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