Cloud computing: Top five tax considerations for your business
October 25, 2012
Grazed from Financial Post. Author: Adrian Tan and Alvaro Flores.
More and more start-ups, entrepreneurial and small to medium-sized enterprises (SMEs) are migrating to the cloud and grappling with new tax considerations and challenges. Ernst & Young’s latest Global information security survey reveals 45% of companies have already deployed or are evaluating cloud services. What’s more, cloud revenue growth is expected to experience a 26% compound annual growth rate from now until 2014. That’s five times faster than the IT industry as a whole.
Cloud computing has the potential to increase the effectiveness of IT initiatives, reduce the cost of in-house operations, increase operational flexibility and generate a competitive advantage in global markets. The cost efficiencies of cloud computing, in particular, can enable start-ups and SMEs to implement IT services without substantial upfront investment. But while the benefits may be clear, the risks are too often overlooked…
Cloud computing is borderless by nature — but domestic and foreign tax regulations and compliance requirements are not. This simple-sounding difference can give rise to complex and potentially significant tax issues for businesses operating beyond their borders. Taxation can vary dramatically across jurisdictions, and international tax authorities have yet to issue definitive guidance for cloud computing models, leaving SMEs to make decisions based on current international and transfer pricing rules that could lead to significant tax controversy and potential double taxation…
Read more from the source @ http://business.financialpost.com/2012/10/25/cloud-computing-top-five-tax-considerations-for-your-business/