Page 25 - Strategic Tax Planning for Global Commerce & Investment

Strategic Tax Planning for Global Commerce and Investment

Implementing a global tax strategy that produces long term
results requires a deliberate, broad and comprehensive
approach that can embrace elements beyond taxes. The
resulting tax strategy should support the enterprise's strategic
vision and goals, blend tax strategy with corporate strategy and
organizational structure and be consistent with the company's
objectives across other functional areas.

MNEs should be focused on tax strategies and planning
techniques that focus on the most significant profit and tax
drivers. Further, given the interrelationship between profits
and cash and the impact of organizational structure on tax
strategy and the ability to reduce taxes, it is often helpful in
developing a tax planning strategy to set objectives and assess
the impact of tax strategies and planning techniques on where
profits are derived and assess the implications to the
enterprise's treasury policy and cash management and
required organizational structure.

Once understood, planning should be focused on each of the
following impact areas:

1. Profit Management

Profit management refers to the sustainable migration of profits
to low-tax jurisdictions and focuses on both financial and
functional profit drivers. First and foremost, profit
management should involve a careful review of the company's
transfer pricing policy and practices to confirm profits are
properly reflected in the books and records of the appropriate
legal entities and jurisdictions in accordance with the arm's
length principle.

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