ABC Ltd, a company incorporated and managed in Switzerland and
engaged in telecommunication services, is going to invest in Japan.
Its Japanese operations will be both manufacturing and providing
services. ABC intends to penetrate the Japanese market for
telecommunication, and according to some market research carried
out before, the operations will be highly profitable within a
couple of years.
How to structure ABC's investment in a tax effective
manner?
One solution could be:
Dividends paid by the Japanese subsidiary to the UK parent will
not trigger Japanese withholding tax. The UK subsidiary will then
transfer funds to Swiss parent without paying any withholding tax.
Upon receipt of the dividends by the parent in Switzerland,
additional Switzerland corporate tax may be due. As an alternative
the funds could stay in UK subsidiary.
