Entity Structuring Checklist

The choice of foreign entity structure always depends on the investor's strategy and the desired degree of independence that the overseas operation is to have from the parent company, but it also depends on the risk/reward profile, local requirements, and general ease of entry. 

With markets in flux around the world and tax authorities on high alert for taxable presence, it’s of increasing importance that due consideration be given to the following issues when determining an entity structure:

• Expected size of the business in overseas location, turnover and number of employees and/or contractors
• The type of activity
• Initial share capital requirements
• The number of shareholders
• The presence of partners
• The responsibilities of the management
• The revenue model
• The tax regime, including planning, accounting, compliance, and risk management concerns:
  
  • Do you know which activities (or thresholds) constitute taxable presence?
  • If there is a Permanent Establishment, how much profit should be allocated to it?
  • Are there any discriminatory taxes on particular industries or types of investment?
  • Are there unusual withholding taxes on fund transfers or sale of goods?
  • Can the US parent “check-the-box” for US tax entity classification purposes?
• Human Resources/Employee considerations, including items such as the following:
  
  • Hiring locally? Expatriate employees?
  • Structure of compensation and required and expected benefits?
  • Payroll Options?
• Available tax credits and history of unexpected withdrawal of those exemptions.

As always, contact your account representative or Advisory if you would like to discuss country particulars.