If your business operates across multiple territories you’ll no doubt have come across the challenge of double taxation. Where should you pay tax – in one country, another, or both?
Over the years, we’ve dealt with double taxation claims from India, Australia, Vietnam, South Korea, Russia, Kazakhstan, Azerbaijan, Angola, Congo, Nigeria, Libya, Algeria, Denmark and Norway, to name but a few. It’s a fascinating area of tax for us because, although the principles are the same, each nation has its own quirks and they interact in unusual ways.
Fortunately, in most cases, the UK has a catch-all which essentially recognises foreign taxes paid on a unilateral basis. Through what is known as ‘matching’, foreign tax credits can be applied to income that has already been taxed in the UK. Mismatches can, however, cause problems from time to time.
Another issue to be aware of is that foreign tax paid on your behalf can count as a benefit in kind when it comes to calculating your UK income tax liability. If your employer operates the ‘net of foreign tax credit’ scheme you won’t be able to access a UK rebate. There are lots of issues like this to address when it comes to foreign tax. Talk to us, give us the facts and we’ll advise as to whether a rebate is available.
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