Concept of Foreign Branches

Concept of Foreign Branches

As the business grows, the company may want to transition to a branch structure as branches are allowed to conduct a much broader range of activity than representative offices. Branches can buy and sell goods, sign contracts, build things, render services, and generally everything that a regular business can do.  A company expands its business by opening up its branch offices in various parts of the country as well as in other countries.

As the business grows, the company may want to transition to a branch structure as branches are allowed to conduct a much broader range of activity than representative offices. Branches can buy and sell goods, sign contracts, build things, render services, and generally everything that a regular business can do.  A company expands its business by opening up its branch offices in various parts of the country as well as in other countries.

A branch office refers to an establishment which carries on substantially the same business and activity as is carried out by its Head Office.  Foreign Branch of a company refers to the branch of a company that operates in the foreign country. It is a branch of a company operating outside the country of its registration.

Some attributes of foreign branch offices are:

  • Does not require opening a separate legal entity in the country of operations
  • The branch is legally part of the company and is not a separate entity
  • The range of the activities that can be undertaken, substantially increase as compared to a representative office
  • Branches generally a constitute taxable presence in a foreign country and must account for and file prescribed returns with the local authorities
  • Attributing the profits to the branch activities require arm’s length transaction
  • Foreign branch is subject to special tax considerations.
  • A subsidiary of a foreign corporation generally is taxed as any other domestic corporation, that is, as a separate taxable entity apart from its foreign parent. In contrast, a branch of a foreign corporation is not treated as a separate taxable entity; instead, the code and regulations employ a set of special rules to determine the tax liability of the branch both in domestic country and foreign country of operations.

Such branch offices help the company in:

  • Spreading its business to diverse locations and thus increasing the customer base
  • Expanding the size of the market for a company's product by attracting more customers
  • Bringing its product closer to the customers by increasing their accessibility to it
  • Making the distribution and marketing of its goods and services easier and more effective
  • Widening the scope of its trading and manufacturing activities
  • Bringing more opportunities and opening unexplored avenues
  • Fuel the growth of the company
  • Enhance its profitability

Related Links

Creation Date Thursday, 29 December 2022 Hits 755

You May Also Like

  • Complexities in GL System

    Complexities in GL System

    Although technically a general ledger appears to be fairly simple compared to other processes, in large organizations, the general ledger has to provide many functionalities and it becomes considerably large and complex. Modern business organizations are complex, run multiple products and service lines, leveraging a large number of registered legal entities, and have varied reporting needs. 

  • Shared Services Model

    Shared Services Model

    Shared Services is the centralization of service offering at one part of an organization or group sharing funding and resourcing. The providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organization or group. 

  • Sole Proprietorship Form

    Sole Proprietorship Form

    The sole trader organization (also called proprietorship) is the oldest form of organization and the most common form of organization for small businesses even today.  In a proprietorship the enterprise is owned and controlled only by one person.  This form is one of the most popular forms because of the advantages it offers. It is the simplest and easiest to form.

     

  • GL - Inquiry & Drilldown

    GL - Inquiry & Drilldown

    An account inquiry is a review of any type of financial account, whether it be a depository account or a credit account. In this tutorial, you learn what we mean by drill through functionality in the context of the general ledger system. We will explain the concept of drill-down and how it enables users to perform account and transaction inquiry at a granular level and the benefits of using this functionality.

  • Operational Structures in Business

    Operational Structures in Business

    Large organizations grow through subsidiaries, joint ventures, multiple divisions and departments along with mergers and acquisitions. Leaders of these organizations typically want to analyze the business based on operational structures such as industries, functions, consumers, or product lines.

  • GL - Different Accounting Methods

    GL - Different Accounting Methods

    The accounting method refers to the rules a company follows in reporting revenues and expenses. Understand the two common systems of bookkeeping, single, and double-entry accounting systems. Learners will also understand the two most common accounting methods; cash and accrual methods of accounting and the advantages and disadvantages of using them.

  • What is a Business Eco System?

    What is a Business Eco System?

    The goal of a business is to generate capital appreciation and profits for its owners or stakeholders by engaging in provision of goods and services to customers within the eco system/framework governed by respective laws(local/international).  The eco system involves various entities that the business works with for delivery of a product or service.

  • Five Core General Ledger Accounts

    Five Core General Ledger Accounts

    Typically, the accounts of the general ledger are sorted into five categories within a chart of accounts. Double-entry accounting uses five and only five account types to record all the transactions that can possibly be recorded in any accounting system. These five accounts are the basis for any accounting system, whether it is a manual or an automated accounting system. These five categories are assets, liabilities, owner's equity, revenue, and expenses.

  • General Ledger Overview

    General Ledger Overview

    What Is a General Ledger? General Ledger (also known in accounting as the GL or the Nominal Ledger) is at the heart of any accounting system. A general ledger is the master set of accounts that summarize all transactions occurring within an entity. Ledger is the skillful grouping and presentation of the Journal entries. Learn the accounting fundamentals, general ledger process, and general ledger flow.

  • Understanding Joint Ventures

    Understanding Joint Ventures

    A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets.  A joint venture takes place when two or more parties come together to take on one project.

Explore Our Free Training Articles or
Sign Up to Start With Our eLearning Courses

Subscribe to Our Newsletter


© 2023 TechnoFunc, All Rights Reserved