Buyers need to consider tax implications of foreign purchases: global study

Buyers need to develop a comprehensive “customs programme” to take full advantage of free trade agreements (FTAs) and limit the amount of duty paid on supplies from low-cost countries according to a new report from KPMG.

Product Sourcing in the Asia Pacific highlights the need for buyers to assess whether the benefits of FTAs, such as preferential duty rates for trade, are worth the extra time and money required to complete paperwork.

“Companies engaged in global sourcing activities are advised to coordinate their tax planning and operations planning to identify and exploit all potential cost-saving strategies,” said the report.

“Closer attention to efficiencies in production and the supply chain, in addition to optimising costs, may dictate that production be scattered across a number of countries. As a result, there will be implications for business structuring, working capital management, risk mitigation, tax and business process engineering,” Willy Kruh, global chair of KPMG’s consumer markets, said.

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