The world is an open door for Scottish business
In the post-brexit landscape, countries from further afield than the European Union are welcoming Scotland, writes Fraser Campbell of Campbell Dallas
Whatever your views on Brexit, as the UK loses its membership of the EU it might be worth taking a steer from a meerkat and having a look at the rest of the world.
Based on a recent international business workshop I hosted, it is clear that the rest of the world (ROW) is ready to do business with Scotland and there are exciting opportunities on offer.
The event featured business experts from specialist advisory firms based in the US, China, India and Ireland, who explored and explained how Scottish businesses could trade with their countries.
They outlined the different economic and political profiles of each country, how their business and tax systems are structured, and highlighted key challenges and risks.
Three consistent themes emerged. Firstly, it was clear that many countries are open for business and would like to do business with Scottish companies. I wonder how many boards are aware of these opportunities, and, more importantly, that there is a warm welcome awaiting?
Secondly, while their tax and trade rules are different, there is a consistent desire to see international business dealings take the form of inward investment, preferably involving a physical presence. Attractive incentives are increasingly being offered to encourage, retain and reward sustainable inward investment.
Thirdly – and most importantly – whilst the rewards of international business can be significant, the cost of getting it wrong can be punitive. All the speakers said it was critical to obtain advice before committing to any form of business enterprise.
Cormac Doyle, head of tax with Eisneramper in Dublin, said that Ireland is proving to be a popular inward investment location as UK companies seek a direct springboard into the EU market.
He added: “There are attractive incentives to invest in intellectual property and knowhow and the corporation tax rate is also very competitive. An Irish business presence could offer Scottish businesses a key advantage.
“Ireland will be the last native English-speaking member of the EU once the UK leaves. It also offers a culturally and geographically accessible location for Scottish businesses and will allow them to benefit from EU freedom of movement rules and access to EU labour.”
Gerard O’beirne, a tax partner with Eisneramper in New York, also pointed to a range of incentives designed to attract investment.
He said: “The government wants international businesses to be part of the economy and to facilitate this shift, the Trump administration introduced the FDII legislation – foreign derived intangible income. FDII is designed to encourage investment in intellectual property and the knowledge economy, with corporate tax rates as low as 13.25 per cent.”
Meanwhile Amit Maheshwari, a tax partner with Ashok Maheshwari & Associates in New Delhi, pointed out that investment in manufacturing is a major strategic target, adding: “India has attractive incentives for businesses wanting to grow a manufacturing business. The incentives include lower corporation tax rates and a benign approach to the extraction of profits and dividends.”
This was followed by Alex Xie, a tax director with SBA Stone Forrester in Hong Kong, saying that China is also trying to attract inward investment with its own incentives, adding: “China wants more international trade and is now offering a wider range of tax and trade incentives, plus corporation tax as low as 15 per cent within the high technology sector.”
The overwhelming message is that there is a world out there wanting to do business with ambitious Scottish companies. The timing is good given that many overseas tax systems are becoming more flexible and accommodating and the range of incentives are as good as any for a long time. However, it is important to seek advice before embarking on any overseas venture as it is much easier to prevent problems than it is to fix them.
Fraser Campbell, pictured, is head of family business and international advisory partner at Campbell Dallas.