Canadian Tax Highlights Multinational Service Firms Professional, consulting, and other service providers such as banks have expanded their global practices to better service other multinational businesses. A host of legal and tax considerations are involved in the combination of professional practices.
Some jurisdictions permit professionals to incorporate.
A larger firm may mean more and larger malpractice lawsuits, and perhaps exposure arising in other jurisdictions. Differences in billing practices, cost of living, work practices, and firm cultures, as well as foreign currency differentials, create challenges. Tax laws governing the treatment of the entity providing the services and its members will affect the dissolution and combination of businesses or the entity and the admission or withdrawal of partners, as well as the annual tax treatment of the entity and its members, such as reporting of income, timing of recognition of income, and the treatment of foreign currency transactions. Corporate governance of a multinational professional or consulting firm is complicated and highly political. Operating internationally may be accomplished by a separate entity's joining an international affiliation for an annual fee and possibly a referral fee for the use of member services.