North American tax reforms - a Praxity conference update

Scott Burkinshaw recently returned from the Praxity North American tax conference in Phoenix, Arizona. The conference ran over a few days, with North American tax reforms and international trade high on the agenda. Scott provided us with the following summary of key themes and issues that may be of interest to UK businesses with US operations.

There were delegates including advisers and businesses from many countries, with the majority unsurprisingly coming from North America.

Major tax reforms in the USA

As we previously discussed, the USA has seen major tax reform over recent years with the emphasis being broadly to reduce American corporate taxes and make US businesses less likely to seek to move profits offshore.

It seems that the tax profession and indeed the IRS (US tax authority) are still getting to grips with all this and, in the case of the IRS, struggling to process all the relevant information.

There was a lot of discussion around how long these low tax rates might last and there was a general expectation that they might rise again soon.

The key message is that if you trade at all in the USA, then you should take advice to ensure that you are fully aware of how these changes might affect you. There are potential penalties of $10,000 dollars for non-compliance with rules you didn’t know existed.

Taxing businesses on the basis of turnover location

There was also consideration of worldwide discussions regarding taxing large multinational businesses on the basis of their turnover in a country rather than their profits. This is intended of course to deal with the perceived issue of internet companies not paying their fair share of tax in companies where they have huge sales. This is very much on the agenda in lots of developed economies and it seem inevitable that the global tax system will start to move this way.

An interesting extension of this might be that not just internet companies end up affected by this. For example, a company selling consumer goods overseas through the internet might also be taxed on their turnover in a country, not just their profits.

Trade Tensions between China and USA

Tariffs arising from trade tensions between China and the USA are causing US companies to seek alternatives countries in which to undertake manufacturing activities – this may present opportunities for the UK.

Overseas trade

The main point arising from all this is that undertaking any trade overseas means that you should take advice in that country – there are many traps and quirks that can easily cause issues, irrespective of the level of trading undertaken.

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Membership of Praxity

Shorts consider involvement within the Praxity alliance to be incredibly helpful for helping our clients with international accounting and taxation advice and as part of the Alliance, we can connect with 65+ other participant firms and share expertise with the 47,000 people who make up Praxity firms in more than 100 countries. So, if your company has any issues in connection to international trade we can help you get the appropriate advice through our Praxity connections.