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Tax minimization methods across the world

Contributed by BridgeWest
04 December, 2017

Reducing the amount of due taxes for companies and individuals is possible by using the facilities provided by the country's own tax regime. There are a few tax minimization methods across the world that imply having a strong knowledge of the local tax, accounting and reporting regulations.

These methods may differ from one jurisdiction to another. Investors are advised to check how they may apply different tax reducing schemes once they register their company for tax purposes.

Maximizing deductions

One of the most common tax minimization methods is to maximize the deductions available for the type of company, category of employee or others. This is done by observing the local regulations for tax filing, but deducting company-related expenses like those for travel or equipment, bonuses or gifts for employees and partners and other business or employment-related expenses. Other types of expenses that may be deducted can be legal expenses.

Investors can also reduce taxes by moving the income from one tax year to the other. This is commonly referred to as tax deferral.

Some jurisdictions are known as tax havens. These are countries that employ a very low taxation regime, provide deductions and incentives to investors, both local and foreign.

It is advisable to seek information on the tax laws in a country of choice before opening a company. For example, investors who want to set up a company in Thailand can use the help of a local tax expert.

Examples of tax minimization in different countries

Investors can reduce taxes in Malaysia by making charitable donations. According to the Income Tax Act, these can be deducted from the gross income.

Tax minimization in Spain is also an option for local and foreign investors. For the latter, it is important to pre-determine the tax residency.

The Netherlands is one of the most attractive countries in Europe, not only because of its central location but also because of its favorable taxation regime. You can calculate your taxes in the Netherlands by using an online tool.

Efficient tax planning and minimization can be very important for businesses. While these are just some methods, they are not exhaustive and investors are encouraged to seek professional tax planning services.


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