What are the key issues and who can assist?
Many businesses seriously consider starting or moving their operations to other countries.
The first step is to do your research:
- What are the rules pertaining to operating in the other country?
- Do you need to get a special licence?
- Is it desirable to incorporate a separate company in another location or can your Australian company operate in that location?
- Have you had a discussion with Austrade? Austrade is the Australian government’s export advisory organisation, which has offices in approximately 80 different countries around the world. They can give you local intelligence on general business operations and, if you contract them to do so, they will prepare a specific report on a particular industry.
- Is there a double taxation agreement between Australia and the country in which you’re proposing to operate?
- Who are the competitors operating in the marketplace?
- How easy is it to obtain staff?
- What are the costs of employing staff?
- Have you had discussions with your bank relative to the pitfalls of transferring money to that foreign country to start the business? Can you transfer money back out from the business operations?
- Are you likely to run into some exchange control issues from the country’s reserve bank? It’s a good idea to have a discussion with the Export Finance Insurance Corporation as to whether you can insure the sales revenue you’re hoping to receive from your debtors in foreign countries. You can also have discussions with independent insurance companies that may be able to offer you export debtors’ insurance.
- What are the political risks of starting a business in the foreign country you’re considering? Over the last 15 years, there have been a number of instances around the world, where it’s been very difficult for Australian companies to trade with businesses in another country, for various reasons. How would this affect your business operations if you were operating in that country and this occurs?
These decisions require expert input from lawyers and accountants, both in New Zealand and in your domestic market, so you’re fully aware of the rules and conditions.
There are also often rules and conditions that might not be published that may apply to running in any foreign country, which is why it is good to have local, on the ground advisors working on your behalf.