We can assist in the following areas of telecoms tax planning and re-structuring:

Post-acquisition tax planning and re-structuring

• Re-organising the tax structure of the acquired telecoms company to ensure the tax benefits are preserved as to:
  · Sales
  · Service companies / LBUs (Local Business Units)
  · Ownerships of IRUs (Indefeasible Rights of Use)
  · Operations & infrastructure
• Tax pros and cons of holding acquired company via a newly formed Holding company.
• Establishing intermediate companies to reduce the tax burden post-acquisition.
• Operational issues affecting re-financing of underlying business.
• Identifying and dealing with transfer pricing issues.
• Dealing with VAT issues.(see below). 
• Dealing with withholding tax issues on royalty payments etc.
• Reviewing tax efficiency of contractual arrangements (e.g peer-to peer agreements).
• Reviewing availability / deferral of tax reliefs.

Value Added Tax (VAT) issues

• Use a centralised or de-centralised tax structure for VAT administration.
• Benefits of centrally managing EC Eighth Directive VAT refund claims.
• Using a Clearinghouse approach to manage VAT administration, inter-company accounting and foreign exchange exposure.
• Reverse charge VAT accounting (Article 9 2 e of EC Sixth Directive) within the EU.
• VAT issues arising within the newly enlarged EU - the VAT complications arising in the 10 new Member States - derogations and transitional provisions.
• VAT aspects of supply and install contracts.
• Avoiding non-recoverable VAT.

Transfer pricing issues

• Functional analysis and selecting comparables on basis of functions, risks, assets and capital analyses as to group activities in terms of:
  · Sales and distribution
  · Product and market risks
  · Marketing intangibles
  · Network services
  · Research and development
• Valuation issues.
• Intangibles: ownership, cost and exploitation.
• Joint venture issues: cost sharing, R&D, licencing and customer management.
• Onshore v Offshore R&D, licensing, etc.
• Review of services provided by HQ or parent company.
• Pros and cons of entering APAs (Advanced Pricing Agreements).

Telecoms operating structures

• De-centralised v centralised structures.
• Decentralised structure: LBUs take the commercial risk of operating their portion of global network.
• Centralised structure: Single legal entity assumes commercial risk of operating the entire global network.

Decentralised structure

• Decentralised structure: LBUs own the telecoms switches, employ local sales forces and network staff and sign contracts locally. Incorporating LBUs in form of local subsidiaries avoids tax problems such as Permanent Establishments.
• Tax treaty considerations for location of holding company owning the LBUs.
• Thin capitalisation (debt/equity), capital duty and stamp duty issues.
• Central treasury management.
• Network cost sharing issues:
  · Managing LBUs serving as hub sites incurring additional network capability and costs for the transit affiliates traffic flowing through.
  · Allocation of backbone costs
  · Managing transit costs on basis of origination and termination of calls.
• Structuring network cost allocations in terms of buy/sell, re-imbursement of expense or cost sharing arrangement.

Centralised operating structure

• Parent company decides to centrally manage network operations. LBUs will be responsible for growing local market share. Parent Co will capture network cost in a single entity and create a network company.
• Location of network company from tax point of view.
• Complex VAT and transfer pricing issues.
• Impact of centralisation on Production and Distribution.

HR and other issues

• Processing international payrolls.
• Processing work permits and visas.
• Re-structuring from the HR point of view: assessing the roles and responsibilities, achievements and corporate objectives.
• International assignments: travel policy, tax-efficient compensation and benefits, host country - home country remuneration packages, cost of living allowances, etc.
• European Union competition and anti-discrimination regulations in telecoms.

For further information on our services for telecoms carriers please contact us.