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Branch Accounting

No double taxation agreement in place

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I have a Branch that we need to set up in Somaliland due to creating a permanent establishment there with a project we have.

Somaliland does not have a DTA in place with the UK.

I understand that I need to:

Keep the accounting withing the UK P&L and have a seperate cost centre so that I can pull the accounts out for the Branch when needed to work out any corporation tax.

Pay tax on the profit of the Branch according to the deadlines within Somaliland

If there is no DTA, I can't offset this against UK Corp Tax - will this just then sit as an irrecoverable tax within the UK accounts?

Thanks for your advice

Replies (10)

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By Accountant A
21st Oct 2019 14:31

Francesca Parker wrote:

If there is no DTA, I can't offset this against UK Corp Tax

Who told you that, as a matter of interest?

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Replying to Accountant A:
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By Francesca Parker
21st Oct 2019 16:14

An external accountant in the UK

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Replying to Francesca Parker:
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By Accountant A
21st Oct 2019 18:27

Francesca Parker wrote:

An external accountant in the UK

There you go then. You've got your answer!

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Caroline
By accountantccole
21st Oct 2019 17:49

Sounds complicated enough to need paid for advice.
Is branch definitely the way to go? What is the risk attached to this new site? Would a local company be a safer option?

The level of branch accounting you need will depend on what the local accountant wants. There might be special local rules to follow.

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Replying to accountantccole:
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By Tax Dragon
22nd Oct 2019 09:50

To clarify... do you mean advice in Somaliland? The issues you raise seem to relate to that jurisdiction.

It sounds as if there's already economic activity carried out at a PE there. That's a de facto branch, no?

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Replying to Tax Dragon:
Caroline
By accountantccole
22nd Oct 2019 12:29

UK and local advice. It does sound like planning after the horse has bolted?

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By chicken farmer
21st Oct 2019 19:41

Look up unilateral relief

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Replying to chicken farmer:
Psycho
By Wilson Philips
21st Oct 2019 21:29

Or try another accountant. The advice given, as far as it goes, is correct. However...

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Hallerud at Easter
By DJKL
22nd Oct 2019 10:25

Slightly disappointed that nobody has launched into comments about the OP barking up the wrong tree, should leaf it alone and should twig that third party help is needed; standards on here are really slipping.

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Replying to DJKL:
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By Tax Dragon
22nd Oct 2019 11:07

I thought I'd leave the branch lines to you. (You've a better track record collection.)

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