Multi-jurisdictional tax planning for businesses with multiple entities

Published Friday 19 September 2025

Table of contents

• Understanding multi-entity tax structures
• Why multi-entity tax structures matter
• Cross-border tax optimisation strategies
• Entity structuring for tax efficiency
• Consolidation and group relief opportunities
• Transfer pricing between related entities
• Advance pricing agreements (APAs)
• Planning for different tax systems and rates
• FAQs on multi-entity tax structures

Key takeaways

• Multi-entity businesses face complex compliance risks but can unlock efficiencies with a coordinated tax plan.
• Tax treaties, transfer pricing rules, and local incentives are critical tools for cross-border tax management.
• Structuring entities correctly (subsidiaries, branches, holding companies) has a major impact on tax outcomes.
• Group relief and tax consolidation can reduce the overall tax burden by offsetting profits and losses.
• Advance pricing agreements (APAs) provide certainty and prevent costly disputes with tax authorities.
• Ongoing monitoring of different tax systems and evolving regulations is essential to remain compliant and cost-efficient.

Understanding multi-entity tax structures

A growing business may expand across state or international lines by opening new locations, acquiring other companies, or launching specialised branches.

While this is often a positive step for scaling companies, the tax implications can become more complex. Each business entity will have its own reporting and tax obligations, and it’s important to have a coordinated financial plan to manage these challenges.

As a multi-entity business owner, your cross-border tax management plan should consider the rules in each state or country you operate in, plus how the entities work together.

Why multi-entity tax structures matter

While your entities can deliver commercial benefits, they can also run the risk of compliance issues, double taxation, or missed opportunities for tax relief.

As part of your multi-jurisdictional tax planning, you must understand how your different business structures interact with each other, including:

• Tracking your cash flows
• Reviewing currency conversions
• Reconciling transactions
• Reviewing profits, losses, dividends and financing arrangements
• Understanding individual and collective taxation

Once you have mapped your multi-entity activities, you can investigate opportunities for tax consolidation and relief for a more tax efficient group structure.

Cross-border tax optimisation strategies

Each jurisdiction you operate in will have its own rules on corporate tax rates, deductions, withholding tax, repatriating profits, and reporting. An optimised tax strategy will help you make accurate financial decisions across jurisdictions and ensure compliance while you do business.

It’s a good idea to seek advice on local laws in each location to ensure your tax plan is best suited to your business needs. An effective strategy will identify tax efficiencies in line with your commercial goals.

Key opportunities for multi-jurisdictional tax planning include:

• Taking advantage of tax treaties: Tax treaties - also known as double tax agreements - can prevent businesses from being taxed twice on the same income. Leverage tax treaties to reduce or avoid extra taxes on income sources such as interest, dividends, and royalties across jurisdictions.
• Choosing tax residence and entity: Select the right locations and structures for your business activities to ensure tax efficiency while keeping your operations above board.
• Timing income and expenses: Deferring income to the next financial year or accelerating deductible expenses can help reduce taxable profit within a financial year.
• Seeking local incentives and concessions: Investigate potential research and development incentives, investment allowances, or special economic zone concessions in your chosen jurisdictions.
• Setting transfer pricing rules: When related entities trade across borders, prices need to be fair. Follow clear transfer pricing rules to help you stay compliant and avoid tax problems.
• Using multi-entity accounting software: Specialised accounting software can help you track income, expenses, and taxes for each entity in one place. This makes reporting easier, improves accuracy, ensures compliance, and gives a clear picture of your overall tax position - so you can focus on doing business.
• Reduce withholding tax on payments: Payments like dividends, interest, or royalties to other countries may incur withholding tax. Structuring these payments carefully or using agreements between countries can lower or delay these taxes.
• Keep on top of cross-border VAT and import/export GST: Selling to other countries can trigger foreign value-added tax or sales tax. Registering, filing, and reclaiming taxes properly reduces extra costs and avoids penalties.

Entity structuring for tax efficiency

The way you set up your business entities will have a direct impact on your tax position. That’s why it’s essential to model potential tax outcomes for a tax efficient group structure before expanding.

Choosing between branches, holding companies, subsidiaries or joint ventures will dictate:

• How profit is recognised and taxed
• Exposure to withholding tax
• How losses are used
• How you move cash around your group structure
• Financing opportunities for your business

Find out the key types of business structures in your chosen jurisdiction and their tax obligations to understand which entity suits your business needs and aligns with your goals for cross-border tax management.

Already incorporated? Restructuring your existing mix of entities across borders can also help you unlock tax efficiencies.

For example, a multi-entity business may benefit from merging under a single holding company, consolidating dormant entities, or modifying ownership to simplify compliance.

Consolidation and group relief opportunities

Tax consolidation and group relief provisions can allow related entities to be treated as a single taxpayer or share certain tax attributes - such as losses and credits.

Depending on the region, tax consolidation could mean your group only files one tax return. This simplifies your compliance requirements, reduces admin work, and allows you to offset profits and losses across the group - reducing your overall tax burden.

Beyond offsetting losses, consolidation can also make it easier to access tax credits, reduce transfer pricing issues, and make the most of other allowances.

Be mindful that some of these benefits can also come with obligations, such as shared responsibility for tax debts.

You’ll need to plan carefully to ensure your entities are eligible for these kinds of tax relief provisions, and that the administrative and financial implications will support your goals.

Check local regulations for ownership thresholds, residency requirements, and different entity structures to inform your multi-jurisdictional tax planning.

Transfer pricing between related entities

Transfer pricing is one of the most essential elements of a cross-border tax plan. When your business has multiple related companies, the prices you charge for goods, services, loans, or intellectual property between them are called transfer pricing.

Tax authorities expect these prices to be set fairly, as if the companies were unrelated. Multi-entity businesses must set and maintain documentation to show how their pricing policies reflect market conditions. This is often referred to as trading at “arm’s length”, and prevents businesses from shifting profits through to low-tax jurisdictions. Planned poorly, weak transfer pricing activities can trigger audits, fines, or even double taxation.

But getting transfer pricing right isn’t just about avoiding penalties - it can also affect your cash flow, profitability, and how you move money around your group. For instance, the rates you set for royalties or loans between your entities can determine where profits are recognised and how cash is shared.

A well-planned strategy will help you ensure multi-entity tax compliance and reduce risk for your group. To develop your groups’ transfer pricing plan, compare your prices with market standards, keep clear records, and regularly review them as your business changes.

Advance pricing agreements (APAs)

Some businesses also use advance pricing agreements (APAs), which give certainty from tax authorities about their approach for a set period.

APAs are agreements between a business and a relevant tax authority that outline how transfer prices will be calculated for a group of related entities. An APA is usually set over an extended period of time, assuring business owners on how cross-border transactions will be taxed during that period.

The benefits of an APA for international tax planning include:

• Reduced risk of disputes: Tax authorities have already agreed on your pricing method, so audits and disagreements are less likely
• Predictable cash flow and tax liability: Knowing how profits will be treated makes financial planning easier
• Compliance assurance: Following an APA ensures your transfer pricing is fair and consistent with market standards

For businesses operating across jurisdictions, APAs can save time, reduce stress, and help you avoid penalties or double taxation.

Planning for different tax systems and rates

When doing business across jurisdictions, you’ll have to plan for varied regulations on national and state taxes, reporting, and managing income and expenses.

These differences can pose a challenge to business operations - but can also present opportunities to reduce costs.

Get professional support to learn the local rules in each region you operate in or plan to do business. You’ll want to understand:

• How foreign income is taxed
• Whether you can use tax credits or exemptions
• What you need to include in your reporting
• Double tax agreements your businesses can leverage
• Currency conversion and other exchange controls

Finally, be mindful that global tax rules evolve over time, and you’ll need to monitor regulation changes. For example, new international agreements on a minimum global tax rate are starting to affect how multi-entity businesses are taxed.

By planning ahead, structuring your operations carefully, and utilising available accounting technology, you can minimise risks and unnecessary costs, and leverage opportunities different tax systems offer. This will allow you to free up your own time, and focus on core operations and growing your business.

FAQs on multi-entity tax structures

Here are 5 common FAQs on multi-jurisdictional tax planning and cross-border tax management:

What is multi-jurisdictional tax planning?

Multi-jurisdictional tax planning is the process of managing taxes for businesses that operate across multiple states or countries. It helps reduce compliance risks, prevent double taxation, and optimise overall tax efficiency.

How can businesses avoid double taxation across jurisdictions?

Businesses can avoid double taxation by using tax treaties (double tax agreements), applying tax credits or exemptions, and structuring entities in tax-efficient jurisdictions.

What role does transfer pricing play in cross-border tax planning?

Transfer pricing sets the prices for goods, services, or intellectual property traded between related entities. It must follow “arm’s length” principles to remain compliant and avoid penalties or disputes with tax authorities.

What are the benefits of tax consolidation for multi-entity businesses?

Tax consolidation allows entities within a group to file a single return, offset profits and losses, and access group relief provisions. This reduces administrative work and lowers the group’s overall tax burden.

Why should businesses use advance pricing agreements (APAs)?

Advance pricing agreements give certainty on how transfer pricing will be treated by tax authorities. They reduce the risk of disputes, ensure compliance, and provide predictable tax liabilities across jurisdictions.