International Income Tax: A Guide for Patriot Pickles Expansion

This essay explores the critical income tax considerations for Patriot Pickles as it contemplates global expansion. It highlights the complexities of establishing a taxable presence in a foreign country, emphasizing the potential pitfalls of creating a permanent establishment and the necessity of complying with local tax regulations. The essay advises Patriot Pickles to seek expert consultation to develop a robust tax strategy that minimizes tax liabilities and avoids penalties from both foreign and United States governments. It further underscores the importance of understanding various forms of taxation, including income taxes, property taxes, payroll taxes, and value-added taxes (VAT), across different jurisdictions. Compliance with data privacy regulations and employment contract laws is also noted as crucial for successful international operations. The paper concludes by stressing that proactive tax planning and expert advice are essential to mitigate risks and optimize the company's tax position in the global market. Desklib provides resources for students to study similar topics.

Running head: TAXATION 1
Taxation
Name
Institution

TAXATION 2
TAXATION
Income tax to consider when expanding the business globally
Taxable presence in a overseas country
The establishment of a permanent company in a different country can be difficult because
it will expose their company to taxation in that in that country. Even when they don’t think that
they have created a permanent foundation there, other different activities may be interpreted as
such, and they are restricted to follow the jurisdiction of that regime’s authorities. Even the few
employees that they will have to employ in a foreign country may require them to pay tax and
possibly file tax returns. The creation of a subsidiary comes with extra necessities, for example,
the agreements of transfer pricing (Low, 2017).
Where the IRS fails to explain ‘permanent establishment’ in a different country, there
may exist essential tax treaties between the local country and the United States. Depending on
the area in which the company will be located, the distribution of the income between that
country where the company will be located and the United States may be established in support
of the local jurisdiction. The last thing is that the statute of limitation that operates in many
countries does not start until all the taxpayer files their tax return. In case a return is not filed in
any nation, then such a nation would have a whole year to evaluate those who are paying tax
with income tax. The company will have to ensure that it did not suffer unnecessary fines and
taxes from both the foreign governments and United State governments (Becker, Reimer & Rust,
2015).
The tax ramifications that are used in a particular country are the essential aspect of the
general business decision. Patriot Pickles should, therefore, consider the activity level that would

TAXATION 3
cause the company not to follow the laws of a foreign country, and what the company needs to
take into consideration to ensure that the company complies with the law and regulation.
Following the laws is essential as it protects the business of the company from numerous layers
of fines and taxes because both the foreign governments and federal governments will emphasis
on implementing tough international tax laws. Due to the difficulties involved in operating
business internationally, Patriot Pickles will have to seek the consultation of experts in preparing
a strategy to reduce the company’s tax rate. Seeking advice from the competent experts is vital in
preventing the many pitfalls that the company may experience when venturing into a foreign
country (Pomeranz, 2015).
Compliance: The compliance requirements of the United States can look nominal when
you consider the extensive requirements in most of the countries. So it’s essential for the Patriot
Pickles to take into consideration all the types of taxation that exist as well as the income taxes
can be unpaid at different levels in the separate jurisdiction such as provincial, federal and
country (Brownlee, 2016). The company should take into consideration indirect taxes such as the
property taxes, payroll taxes and value-added taxes (VAT). Since value-added taxes are being
modified across Europe, irrespective of where the company is selling from or what they are
selling, the company revenues will be put under the local Value-added tax. Lastly, they will have
to take into consideration regulations concerning the sharing and handling of the data of the
employee across regions or countries, employment contract, the agreement of national collective
bargaining and the data privacy.

TAXATION 4
References
Low, F. A. R. (2017). A contingent claims model of oil production and taxation in Alberta.
Becker, J., Reimer, E., & Rust, A. (2015). Klaus Vogel on Double Taxation Conventions. Kluwer
Law International.
Pomeranz, D. (2015). No taxation without information: Deterrence and self-enforcement in the
value added tax. American Economic Review, 105(8), 2539-69.
Brownlee, W. E. (2016). Federal Taxation in America. Cambridge University Press.