Hello Everyone
What is the most tax efficient way to extract profits earnt by a company’s branch positioned in South America?
The country has a DTT with the UK, and its CIT rate is 25% and a WHT rate on dividends of 12.5%.
Due to the DTT, can the company make the s18 CTA 2009 exemption, pay the 25% CIT, and then pay a dividend? – With the WHT being able to be reclaimed in the UK due to the DTT?
Thanks
Related resources
Replies (6)
Please login or register to join the discussion.
You need an accountant (who can start by explaining how to do branch accounting, as per your other question).
You're welcome.
You still need an accountant.
Someone who understands the difference between a branch and a subsidiary. (If you do mean a dividend, it sounds like your South American business is a subsidiary not a branch)
I doubt that your business gives products/services away for free. Professional advice is our business.
The 'operation' is currently set up as a branch, but we can swap this to a subsidiary if more optimal.
I guess what I really want to know is.....can a foreign branch send profits back to the UK, especially if the s18 CTA 2009 exemption has been made, and not be subject to any WHT in the foreign country or CT in the UK?
The profits are already in the UK insofar as they are earned by the UK legal entity (albeit in the foreign branch).
If you are talking about repatriating the cash, that's a different question and you need an accountant that understands the tax laws where your foreign branch is located.
If you're also talking about incorporating a foreign company. Guess what. You need an accountant that understands the tax laws, company formation procedures, company reporting obligations in that country.
Your accountant should also be able to tell you whether it is lawful to retrospectively transfer transactions from your branch into the company (hint - it probably isn't).
This sort of tax planning should have been done before you considered foreign investment - what was the advice at the time?
