As the "the Belt and Road" strategy moves from vision to action, Chinese enterprises are unstoppable to  go abroad and integrate into the world economy. More and more enterprises are  starting to register overseas companies and try to "go global". However,  many Chinese companies are in the initial stage of overseas investment and  lack understanding of the economic situation and tax laws between regions,  often facing some tax risks. Below, the editor will briefly introduce how to  deal with these tax risks.

Ignore tax declaration
 Many outbound enterprises neglect their tax declaration obligations in the    early stages of setting up platform companies or acquiring entities overseas    due to the lack of actual business operations. In addition, some companies    in the early stage of "going global" only focus on the feasibility    and development strategy of investment projects and ignore tax issues. Failure    of overseas enterprises to file tax declarations as required will inevitably    have a huge impact on the company, ranging from fines to account freezes.

How to deal with: Due to the different tax policies in different countries  and regions, there are differences in tax declaration and tax rate preferential  policies, which require tax compliance. Enterprises should pay attention to  complying with local tax compliance requirements and do a good job in daily  tax management according to local regulations. In addition, when registering  an overseas company, tax planning should be done well, and reasonable tax planning  can help enterprises reduce unnecessary tax costs.

Before investing abroad, Chinese enterprises should fully familiarize themselves  with the management norms of the invested country, pay attention to complying  with the local "going global" process, and from the perspective of  international tax planning, reduce the tax burden of the location of overseas  institutions through organizational structure and business activity arrangements,  thereby enhancing the international competitiveness of the enterprise.

Underpaid taxes
 Going global "enterprises often engage in frequent related party transactions  with overseas affiliated companies in terms of goods, services, royalties,  technology transfer, equity, and other aspects. The distribution of cross-border  income obtained from this will affect the tax rights and interests of different  tax jurisdictions, and the enterprise will therefore face tax risks.

For example, Company A, a "going global" enterprise, conducted acquisition  negotiations with Company B overseas and reached a preliminary acquisition  agreement for Company B. However, Company A did not immediately report to the  tax authorities. From a tax perspective, if the commissioned R&D service  is completed after Company A completes the acquisition of Company B, then the  service constitutes an overseas related party transaction, and the tax authorities  need to thoroughly verify the authenticity of the transaction and deduct pre  tax costs from the corporate income tax.

How to deal with it: Enterprises proactively inform tax authorities of their  overseas acquisition information and business situation to avoid the risk of  underpaying taxes or falsely reporting costs due to related party transactions.

double taxation
 The risk of double taxation refers to the situation where each country exercises    its own tax jurisdiction, resulting in the repeated imposition of corporate    income tax on the same income of outbound enterprises. In the process of    accelerating the "going global" of Chinese enterprises, the risk    of double taxation in overseas taxation is becoming increasingly prominent,    which has become a pain in the hearts of many enterprises.

How to deal with it: Enterprises can use bilateral tax treaties to resolve  tax related risks. By signing tax treaties between regions with different tax  jurisdictions to allocate the taxation rights of cross-border business and  investment income, tax certainty can be improved, and tax disputes can be resolved  through tax cooperation and bilateral consultations to safeguard the legitimate  rights and interests of taxpayers.