Considering Your International Tax Structuring in Light of New Economic Circumstances

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Your challenges

As a Canadian company that has international operations and tax structuring in place, you should consider the impact of the current economic environment on this tax structuring, as well as review these structures with new priorities including cash flow and gaining access to capital and cost savings.

Put differently, with turmoil in the credit markets and a crippled Canadian dollar, you may want to keep the following options in mind:

  • Reorganizing your international operations in a more tax-efficient manner—and to even restructure your controlled foreign corporations (CFCs) at a lower tax cost. This is critical given that many Canadian companies which have acquired significant international operations may not be structured tax efficiently.
  • Maintaining cross-border financing structures. In fact, many clients with intercompany lending will find that borrowers are no longer able to adequately service the debt, or may be in default under current various financial covenants.
  • Electing on the functional currency—especially with the recent decline in the Canadian dollar against the American dollar.
  • Realizing losses associated with your foreign accrual property (FAPL). It is important to note that many companies may have latent losses which could also be realized and give rise to FAPL.

How PricewaterhouseCoopers can help

We want to help you assess whether any of these issues apply to your business and if so, assist you in preserving cash. By reviewing your international operations and structuring, our tax and transfer pricing specialists will help you cut back on costs, preserve and improve cash flow, and overall, reinvest your foreign earnings.