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This week’s blog post is written by Withum’s International Services Group member, Phyllis Tsai.

Withum’s International Services Team recently welcomed one of our HLB International network firms from China, Baicheng Tax Consulting Services.

Beicheng has been operating as a professional tax service company since 2003. They mainly service large-scale companies and corporations in China. They are based in Shanghai and have braches in Beijing and Shandong Province. All of Baicheng’s five directors (plus one translator) came to visit Withum’s Princeton office to gain an understanding of the U.S. tax system and an introduction to Withum’s culture and various services we provide to our clients. Throughout this meeting, Baicheng also gave Withum some insight of the Chinese tax system and culture relating to marketing.

HLB baicheng

Since most of our visitors do not speak or understand English, May Du (senior tax accountant in Withum’s Princeton office) and I practiced our Chinese skills to try to translate Withum’s, culture, various industry and service niches, and social media involvement, etc. into Chinese terms our visitors would understand. Withum’s attendants also used this opportunity to practice correct business card exchange etiquette in China. The following are some points we learned from meeting our HLB friends:

  • China does not have many social media tools as we do for Baicheng to market their services. They do not have access to Twitter, YouTube, or Facebook. They have limited access to LinkedIn.
  • They have limited internet access so it is difficult for them to download HLB training materials or provide their clients training online. Therefore, they hold many conferences to provide the training to their employees and tax updates to their clients.
  • China does not have individual tax returns currently. Chinese withhold taxes from their paychecks in lieu of filing tax returns (although this policy will change soon).
  • Less than 10% of companies hire accounting firms to prepare corporation tax returns.
  • China revised their transfer pricing rules recently which would be more in line with OECD rules (Organization for Economic Co-operation and Development).
  • Some of Baicheng’s clients would like to invest abroad since Chinese government has been encouraging companies and individuals to do so.

During early 2016, it was reported by news media that due to China’s “Go Global” strategy, Chinese companies have invested more money in foreign locations in the first ten weeks of 2016, compared to all of 2015. Chinese companies invested $110 billion until mid-April 2016, compared to $108 billion in 2015.

Craig-Walker-e1464790868125This Where in the World blog post is written by Craig Walker, Senior Tax Manager with Hawson’s Chartered Accountants.

From the argument over selling bendy bananas to the threat of an emergency budget, the EU referendum campaign has undoubtedly had its share of the headlines over the past couple of months.

The biggest headline now though is of course that the UK has voted to leave the EU.

So what happens next? Will the Brexit vote result in a complete overhaul of UK tax as we know it?

The purpose of this blog post is to briefly explore some of the potential tax implications of the UK’s decision to leave the EU. It is important to stress that the impact of Brexit on UK taxes is extremely difficult to predict at this stage, since many questions remain unanswered.

VAT

The EU has certainly had a significant influence on the UK tax system, perhaps most notably with regard to VAT. VAT is essentially an EU driven tax and leaving the EU could result in significant changes to this area of tax.

Whilst the UK may no longer be obliged to have a VAT system once post-exit terms have been agreed, it is fairly safe to assume that VAT will not be abolished given its contribution to the Treasury.

The UK will, however be free to decide which goods or services are eligible for reduced rates or exemptions. Freedom from strict EU VAT rules could, for example, allow the government to remove the 5% VAT charge on domestic fuel that is currently required by the EU – a change proposed by the Vote Leave campaign during the referendum.

Even if no amendments are made to VAT law in the UK, there could be changes in how HMRC applies VAT legislation because interpretations of the VAT rules would no longer be bound by decisions made by the European Court of Justice.

It is unclear at this stage how the VAT treatment of the UK’s trade with the EU will be affected – this will depend on the terms the UK is able to negotiate post-exit. It may be that trade could continue in much the same way as before if the UK is able to obtain access to the single market, or alternatively UK exporters may be subject to EU import VAT and Customs duties.

The Brexit is likely to create winners and losers for both businesses and consumers.

Emergency Budget

During the lead up to the EU referendum, the Chancellor warned that an emergency budget would be necessary to plug a potential revenue gap in public finances following a vote to leave. An emergency budget could of course bring significant changes to the UK tax system and possible tax rises.

The Chancellor has previously spoken about a 2% rise in the basic tax rate (currently 20%) and a 3% rise in the higher rate (currently 40%). He also indicated that the rate of Inheritance Tax might rise by 5% (currently 40%).

However, there is also an expectation that the government’s focus will be on delivering an upbeat message on the UK economy, in an attempt to calm the markets and boost the UK’s attractiveness as a place for doing business. Therefore, instead of making any immediate tax rises, the government may perhaps look to extend the period of austerity beyond 2020.

Business owners would certainly welcome clear timeframes and roadmaps for future UK tax legislation to help them through what will undoubtedly be a period of certainty.

Other Taxes

A total overhaul of UK taxes is unlikely to happen because of Brexit alone. A large proportion of the UK’s taxes are entirely domestic in nature, and the Brexit by itself won’t directly change any of these.

There may be small changes to the Gift Aid rules, which could affect UK taxpayers who wish to donate to EU-based charities. At present, UK taxpayers can make donations to EU charities and benefit from UK Gift Aid tax relief, however this approach could be changed post exit.

It will be interesting to see how the UK’s existing commitment to international tax agreements will be affected, both in terms of corporate tax and increased transparency.

In Summary

The UK tax system will probably remain largely unchanged following Brexit. The most significant changes are predicted to revolve about VAT, but most of these changes are expected to be gradually implemented and will emerge over time, as the UK negotiates post-exit terms. We will keep you updated.

The real, practical tax implications of the UK’s decision to leave the EU will vary from business to business.

Nicole-DeRosaThis week’s blog post is written by Withum’s International Services Group member, Nicole DeRosa.

Who says taxes are logical? Even Albert Einstein agrees that “the hardest thing in the world to understand is the income tax.” While maybe not the easiest to understand, most taxes and tax exemptions are usually logical… except the few legitimate ones we found below.

china_round_icon_256China – Chopsticks Tax

In 2006, China introduced a 5% tax on disposable wooden chopsticks in an effort to preserve its vanishing forests. Annual production of disposable wooden chopsticks in China exceeds 45 billion pairs, which is equivalent to about 25 million trees – that is a lot of wood!

denmark_round_icon_256Denmark – Fart Tax

Yes, you read that correctly – the fart tax. In 2009, proposals to tax the flatulence of cows and other livestock was quite the hot topic in Denmark. Livestock contribute 18% of the greenhouse gases believed to cause global warming, according to the U.N. Food and Agriculture Organization.

united_states_of_america_round_icon_256United States – Tanning Tax

Much to the dismay of Jersey Shore’s Snooki, the Tanning Tax was passed in 2010 to help pay for healthcare reform and was meant to deter customers from using indoor tanning salons. The 10% tax was justified by evidence that tanning can lead to skin cancer.

mexico_round_icon_256_1Mexico – Obesity Tax

Aiming to curb unhealthy consumption habits, in 2013 Mexican lawmakers approved an 8% sales tax on high-calorie foods such as potato chips, sweets, and cereal. The controversial tax reform also targeted sugary drinks, increasing the price of sodas by one peso, approximately seven cents. Mexico isn’t the only country that has implemented such a tax. Denmark introduced a fat tax at one point on items that contained more than 2.3% saturated fat. California has implemented the first of this tax in the United States, effective January 1, 2015 called the Measure D Soda Tax which imposes a tax of one cent per ounce on the distributors of specified sugar-sweetened beverages. That’s not too sweet if you think about it!

irelandIreland – Artist Tax Exemption

Starving artists might never go hungry if they reside in Ireland! According the Taxes Consolidation Act of 1997, income earned by writers, composers, visual artists, and sculptors from the sale of their works is exempt from tax in certain circumstances.

KsikoraThis week’s blog post about volunteering in Africa is written by Withum’s International Services Group member, Kathy Sikora.

Dear Africa,

It’s been a little over a year since I’ve seen you, and I’ve missed you so much that I’ve decided to come back and stay… for an ENTIRE YEAR! Get ready!

So what’s happening?

Nerdy accountant exciting things! I will be joining a team of missionaries at a hospital in Niger. I’m sure there will be several hats that I will wear once I arrive; however, my official duties (for now) will be to work with all of the finances and the accounting/finance team at the hospital. I’m grinning from ear to ear at the fact that I will get to combine volunteering, traveling the world and accounting all in one opportunity – this one!

When am I going?

Exact dates still to be determined, but the plan for now is to be in Africa at the end of June 2016!

But, how?!

So there was that time I found myself at the missions table at our church ministry fair one Sunday afternoon, picked up the missions pamphlet, saw Niger on the list and said to myself, “Totally going there!” Two and a half months later, I was on a plane. I was extremely fortunate to be part of the group from our church that went to Niger in December 2014, which is when I discovered this hospital for the first time. There seems to be this rumor going around that most short-term visitors have a tendency to return…and well, the rest is history.

And more importantly, why?

IMG_1878For starters, I’m really looking forward to how awesome of a professional experience this is going to be. I’m excited to be a part of a multi-lingual team and to learn French! I’m excited to teach others, especially those who have not had the same education opportunities as I’ve had. I’m excited to use my accounting skills to help the hospital. Gosh, I’m even excited to have to reconcile payroll, and I tremble at the thought of reconciling payroll (not joking, I seriously dislike anything payroll related). This will no doubt be a HUGE challenge for me and one that I am really looking forward to!

The hospital I will be at is such an important staple of the surrounding community and region for that matter. It serves many. The latest study showed just one doctor for every 50,000 people in Niger (compared to the U.S. that has 123 doctors for every 50,000 people). The survival of this hospital depends on missionaries to come and serve the needs of the hospital and the people. I am told that there is a huge need for accountants and to be able to fill a role that is so vital in the ongoing of operations of this hospital is giving me all the more motivation and excitement to go. I’m really looking forward to joining the team of missionaries there, and words cannot describe how honored I feel to be chosen to fulfill this need for them.

Above everything, expanding the kingdom of God so that others may know the joy of knowing Jesus and the hope of eternal life is what this is really all about. This hospital is a Christian hospital, and when people go there, they can hear the gospel – a story of which still remains unknown to a mass amount of people to this very day. To have the chance to love people and serve others – just as the Son of Man did not come to be served, but to serve, and to give his life as a ransom for many. I consider it such a privilege to get the opportunity to do life with the Nigeriens for a year. I have no doubt I will learn many things from them. Life is not about being comfortable, making money, having a successful career, buying a new car, or even traveling the world (too bad I can’t remember this all the time), nor does my ultimate satisfaction lie in any of those things. And as I continue to do life here, I’m left with a hunger that can only be satisfied by one thing and that’s Jesus. SO… This is me following where He wants me to be. This is a big leap into the unknown. I have no idea what my future in this journey will hold, but I know who holds it!

I am incredibly humbled at this opportunity, a little nervous, and a little “is this really happening and am I really doing this?” – but most of all I am excited. That said, I would love nothing more than to continue to share this journey with all of you! More details coming soon! I will be sharing much more about Niger, this hospital, and this experience in the weeks/months to follow!

Bali is every Australian’s cheap vacation spot. It’s only about a 3.5 hour flight from Perth and was quite an amazing experience.

Bali 1

How to do Bali:

Step 1: As you arrive at the airport, there will be about fifty local Indonesian guys asking if you need a taxi. Do not say yes or they’ll charge you 100,000 IDR (Indonesian Rupiah). This is a rip off here in Bali. A taxi should only cost you 10,000 IDR (approximately USD 73 cents). As you will learn, everything is cheap in Bali.

Step 2: Become a millionaire. Exchange $100 USD for ~$1,371,740 IDR.

Step 3: Stay in a hostel in Seminyak or Kuta and meet a random group of travelers. Hire a motor scooter for a day for 50,000 IDR (~$4) and drive south to Uluwatu to enjoy a day on the secluded beaches and watch the sunset at the Uluwatu temple.

Step 4: Don’t forget to refuel your motor scooter at a local shop. They’ll sell you petrol for 10,000 IDR and pour it out of a 1 litre Absolut Vodka bottle (the vessel of choice here in Bali). Be careful on your motor scooter; your life is at risk with every turn. The locals drive with their whole families (husband, wife, kid, groceries) on one motor scooter like it’s a walk in the park.

Bali 2Step 5: Travel up north to go scuba diving at Tulamben, a quiet village on the northeast coast of Bali. Tulamben is one of the best dive sites in the world, complete with its own shipwreck, the USAT Liberty.

Step 6: Do some bargaining with the locals in Kuta. Buy a pair of Ray Ban sunglasses for $4.

Step 7: Stay in a four star hotel for ~$50. Sit poolside and relax; you’re in paradise.

Bali 3I call Bali a third world paradise because you’ll have opportunities to sit on beautiful beaches, relax poolside, and enjoy the natural beauties of Indonesia, but you’ll also experience a culture shock. The locals live a different life than what some people in the States are used to. The people may seem poor and underprivileged and they will definitely haggle you for a few dollars. This is because they rely so much on tourists spending money so they can feed their families. Even though you may see them as deprived, the local people are some of the happiest people I’ve met in my travels, which is truly amazing. Bali is known for its tourism and over the years, the growing population in Bali has caused an excess of garbage pollution in landfills, the streets and beaches. If you’re keen on a trip here, I would go soon as Bali is slowly dying because of tourism.

By Lonnie Bloom, MBA | 609.520.1188 | lbloom@withum.com

I shared a flat with a secondee from Denmark (Vy). Our stay in Perth has allowed us to explore some of the many sites of Perth. Here are a few we enjoyed:

  • King’s Park – one of the nicest/cleanest parks we have seen. Stop here for a beautiful view of the city and a stroll on the elevated walking bridge (Federation Walkway).
  • Fremantle – Fremantle is a hip town in Perth that has heaps of restaurants, bars and shops. We bought fruits and vegetables at the markets, went on a night tour of the Fremantle Prison and had to stop by Little Creatures Brewery for dinner and drinks.
  • Perth1Rottnest Island – About 20km from Perth, an island tour would include cycling to pristine beaches, snorkeling in clear water, and a chance to meet a few of the 10,000 quokkas that live there. The quokka is a cousin of the kangaroo and is one of the most photogenic animals on the planet.
  • Lancelin and the Pinnacles – Our first time sandboarding in Lancelin produced a few funny videos and even the best accountant wouldn’t be able to count all of the rocks at the Pinnacles.

Perth2

Perth3

  • Swan Valley – Wine tours are a must if you travel to Perth! The vineyards and wineries were beautiful and the river cruise back to the city was all smiles.

The work and the sites of Perth were new and exciting, but the people we encountered, conversations we had, and the lifelong friends and colleagues we made outweigh any of the pictures we put up on Instagram. The secondment program allowed us to step out of our comfort zones, jump into a new environment and experience a new life for four months.

By Lonnie Bloom, MBA | 609.520.1188 | lbloom@withum.com

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