We are living in an increasingly dynamic and global environment. Businesses and individuals are investing and earning income across multiple borders more than ever before. With the increase in cross border commerce comes an increase in regulation and tax compliance.
For over 20 years BS&P has been helping clients residing in Canada and various other countrieswith international tax planning. We work to ensure you are achieving the best tax-favored position, reduce the impact of double taxation and ensure you are current on all required filings. Three activities that typically trigger cross border tax considerations:
1. Foreign Bank accounts.
If you or your business establish bank accounts that operate in other countries for the sake of operational efficiencies; you could be required to report them with the Treasury Department under the Foreign Bank and Financial Accounts Report (a.k.a FBAR). Certain thresholds apply to the rule but the treasury reported that FBAR filing have grown on average by 17% per year during the last 5 years. Ensuring compliance with this reporting requirement has been a major initiative by the Treasury Department.
2. Transactions with Foreign or Domestic Related Parties
In the US, the IRS requires corporations and businesses to disclose relationships with related parties. They define a related “as a U.S. corporation that is 25% foreign owned or a foreign corporation engaged in trade or business within the United States.” In other words, if your business purchased or sold inventory, purchased or sold property, collected or paid rents, interest, royalties, premiums and commissions with a foreign corporation; IRS Form 5472 needs to be filed. This list is not exhaustive so if you are unsure if you meet the requirements, our tax professionals at BS&P can help point you in the right direction.