ZERO GRAVITY | FALL 2009 EFFECT

A New Appreciation for International Business

by Laura Olivieri

I was staying for a month in London with a business acquaintance I'd made through LarsonAllen’s membership in Nexia International, a worldwide network of independent accounting and consulting firms. I was working with Smith & Williamson Corporate Tax Group, a Nexia affiliate in Britain. The opportunity allowed me to build business relationships as well as learn firsthand about the intricacies of taxation in the UK.

Doing business in a foreign country is humbling—not just because I was unfamiliar with England’s business or compliance issues, but because all the social and business cues are different (not to mention the nuances of the local dialect).

In London, I was part of a team that was responsible for solving complex international tax issues. Each day was a learning experience. During my stay, the government reduced the value-added tax from 17.5 percent to 15 percent. What was extraordinary, in comparison to the U.S. tax system, was that the changes were implemented almost immediately. The adjustment was laid before the House of Commons on November 24, 2008, and came into force on December 1, 2008. Businesses quickly responded to this change and the Smith & Williamson tax team had to adjust just as quickly to assist their clients.

During my time in London, I found myself discussing U.S. taxation with many Smith & Williamson clients and frequently struggling to explain our state and local taxation. Explaining to a U.S. citizen that every state has different sales taxes, income taxes, and property taxes is a daunting task, but it is even more challenging to discuss it with someone unfamiliar with our business culture.

I also learned about Smith & Williamson’s clients’ operations and their industries. Much of our conversations and consultations involved how their financial services clients were responding to the world economic crisis as it began to unfold.

Of course, some of the business insights I gained abroad are impossible to understand without the specific context of working in that country. But the cultural insights were interesting and valuable too. British etiquette was always present in business meetings and meticulously observed between co-workers. The formality takes a little getting used to, but the politeness often goes along with a certain efficiency as well—even on the subway. For those in a hurry, a “fast lane” is left open on the escalators. Everyone stands to the right to allow other passengers to move quickly on the left.

Working side by side with my colleagues at Smith & Williamson provided me with a real appreciation of the business needs of international companies and how crucially important it is to be able to provide specifically tailored advice to them. A depth of understanding is more essential than ever because tough economic times can provide opportunities as well as risks for a client.

Though clearly not an expert after one short month, during my stay I learned about a variety of international tax issues including:

• Organizational restructuring in the UK
• Complying with local tax reporting
• Preventing tax leakage and unused foreign tax credits
• Ensuring income is reported in the proper jurisdiction to prevent double taxation
• Understanding how foreign financial statements adhere to U.S. GAAP rules
• Treaty positions

In addition to these, I bring back to my workplace a greater depth of knowledge and a sensitivity to complex international issues, which will allow us to serve clients with a broader, more holistic approach.

Being in London at a time of world economic turmoil was interesting from a personal and a professional point of view. In Britain, the challenging times didn’t seem to make people as nervous as they did in the United States, and this observation provided some comfort. Maybe when your history is as long and rich as London’s, you realize the crisis will pass and civilization will endure. So you persevere, get on with your work, and make some time to have a cup of tea, too.