Managing tax compliance in the UK is complex enough, but cross-border business challenges are even greater. Few industries are as exposed to this complexity more than those in travel, with UK-based international firms having operations spread far and wide across the world. This article outlines these tax challenges and provides an overview of the strategies used to combat them.
Cross-border tax challenges for international travel firms in the UK
UK-based international travel firms often grapple with complex challenges such as managing cross-border transactions, VAT implications, transfer pricing issues and following compliance processes in various countries. But there’s no doubt the ability to successfully navigate these challenges is crucial for success.
Strategies for managing tax complexities
Tax complexities can certainly be managed and to great effect. A well-oiled global tax approach often helps multinationals sustain growth and drive further success without the limitation of penalties. The following are some of the most common strategies for managing global tax complexities:
Establishing a solid tax structure: Strong foundations are critical for successful global tax processes. This includes choosing the right legal entities, in the UK and abroad, and identifying tax-efficient jurisdictions to maximise profits. With this in place, tax compliance and management become much simpler and the room for error is minimised.
Streamlining tax compliance with technology: The digital revolution has brought with it developments in tax automation, which helps companies streamline reporting and compliance by ensuring accuracy and efficiency. The UK government is relying on a new tax administration strategy, Making Tax Digital (MTD), which aims to streamline the national system. Other countries still rely on non-digital tax reporting, but tax compliance technology can help with managing both types of processes.
Work with global travel and accounting experts: Whether you’re utilising tax technology or not, working with accounting and tax specialists with travel industry knowledge is always advisable. Specialist bookkeepers in London will know almost everything about ABTA, IATA and CAA regulations, as well as be up to date with regulations set out by travel regulator bodies and international tax authorities.
Make full use of tax incentives and reliefs: Different countries offer a variety of tax incentives and reliefs in line with their governmental strategies. This often results in opportunities such as R&D tax credits, charitable exemptions and allowances for travel-related investments. Experts in travel tax and accountancy should be able to help you maximise the benefits of these schemes wherever you’re operating.
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