Going global: Reducing tax barriers for SMEs

As the world grows ever smaller, more small and medium-sized Canadian enterprises (SME) are expanding their businesses beyond our borders.

As the world grows ever smaller, more small and medium-sized Canadian enterprises (SME) are expanding their businesses beyond our borders. But in some ways, tax regulation and administration burdens can hinder their ability to succeed in new markets.

According to PwC’s global study of the tax burden for medium-sized businesses, Paying Taxes 2012, tax rates and burdensome tax administration are a top obstacle globally. The report cites a World Bank Group Enterprise Survey of companies in 123 economies, which found that companies consider tax rates to be among the top three constraints to their business, and tax administration to be among the top eight.

Recognizing the importance of SMEs in driving economic growth, tax administrations in Canada and their OECD counterparts are talking about ways to reduce barriers to SMEs’ global expansion. The tax authorities are looking into areas where compliance for SMEs could be eased and/or where the interaction of various domestic tax laws is too complex. For example, some suggest that a simpler set of transfer pricing rules and documentation requirements for SMEs would help facilitate their global expansion.

Join in the conversation

Do you have similar, practical suggestions that we could share with the tax administrations of the OECD members? Have you or your SME clients experienced tax administration difficulties on expanding globally? Remember, the tax administrators focus is on barriers to doing businesses across borders, rather than those that are particular to specific countries.

Post a comment below, or email Gabe Hayos directly.

Gabe

Conversations about Tax is designed to create an exchange of ideas on tax policy and practice developments and issues and their impact on Canadian accountants who practice tax.

About the Author

Gabe Hayos, FCPA, FCA, ICD.D

Vice-president, Taxation, CPA Canada

Highlights

Update your knowledge and strengthen your network at this must-attend conference covering the most important issues and trends affecting audit committee members.

It’s probable that someone you know is deep in debt. If you are observant, you might see one of these seven signs.