Once a commercial and tax-efficient structure is determined—one that addresses both historical and potential risk—it is time to take the theory behind the structure into the realm of practice.
Will using a classic principal structure in the new entity help keep maximum profits in low tax jurisdictions? If so, one entity will own title to inventory throughout the various jurisdictions and the principal would require a VAT registration in each location where inventory is held.
The tax function should ascertain proper implementation and determine the impact of changes in businesses, laws and regulations on implemented tax planning.
Operational changes have a tax consequence due to the change in transactional flows and the change in a company’s assets, functions and risks profile.
Important is to ensure that the new operating model is not only implemented correctly from a tax perspective, but also ensures that business processes are tax aligned realizing support of the business in the areas of compliance, finance & accounting, legal IT systems, indirect tax and regulatory matters. That means teaming is a necessity with with various work streams.
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