Allocation And Apportionments

Critical to the determination of the worldwide effective tax rate, every person, legal or natural, that is subject to income tax in more than one jurisdiction must come to a reasoned method of how to allocate income and loss between those jurisdictions. Failure to correctly make these broad allocations can result in avoidable double taxation, unpleasant surprises arising from fiscal/tax audits, and a inability to properly plan for tax minimization.

While there is general consistency in the rules of income/loss allocation among the industrialized countries, some significant exceptions can be encountered, most notably in the developing world. Additionally, even where the various country’ rules are substantively the same, important differences in the treatment of certain components of income and deduction are virtually inevitable. Awareness of such differences opens the door to planning opportunities and helps the taxpayer stay out of trouble. The critical knowledge base references the rules of each jurisdiction in which the person is liable to tax, extra-jurisdictional planning opportunities and relevant income tax treaties.

Applied NEOITG experience mitigates the exposure to double taxation and helps identify opportunities to capture income in the most favorable tax jurisdictions.