Joint ventures across international borders?

[taro]

I couldn't find many discussions about the implications of a product-based venture between international partners, so I wanted to hear from some more experienced people here.

Some food for thought (my current plan):

• Taxation can vary based on international treaties and local laws. For example, free trade agreements, double taxation prevention (between countries), and business structures.
  • One side should focus on developing the export supply chain by air and ocean, the other should focus on domestic delivery. Both will handle the application for preferential tariffs. Incoterms can help to define requirements here.
  • Both parties will begin as pass-through businesses operating with a contract-based partnership. Profits and expenses will be shared based on resource and work input, and the split amounts will be reported separately in each country.
  • The responsibilities and remuneration of each party in the joint venture will be outlined in contracts, to be renewed or modified as needed.
• Transfer pricing and Non-arms length transactions. If you work with a friend or family member, there are laws that prevent large transaction price differences from the "uncontrolled rate".
  • My understanding is that as long as transactions are recorded with due diligence and are close to uncontrolled prices (normal arm's length transactions), taxes will be similar to a normal partnership.
• Accounting in multiple currencies poses a few options because of moving exchange rates.
  • The simplest is bookkeeping with one currency, converting the other currencies based on exchange rates at the time of the transaction.
  • It is also possible to manage records for trading accounts in different currencies and record conversions separately.
• Marketing, Sales, and Customer Relationship Management
  • This should be the responsibility of the receiving side, which should have a better understanding of the market. However, it is still important to get feedback from the other partner.

Thanks for reading, please feel free to add or correct ideas.

 

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