CyberTax 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).
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· 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: info@cybertax.co.uk.