How can family businesses get prepared to the transition of business to the next generation?
Many high-net-worth families start their business in a single country and consider to spread out across new jurisdictions. Family members may not have the knowledge to tackle the issues of governance, legal, tax and succession in different countries. One of the solutions would be seeking the helping hand from external expertise.
Managing multijurisdictional tax and compliance issues is challenging for traditional family businesses, a reliable and experienced team of experts having extensive understanding of the tax systems in different countries is definitely the key to overcome the obstacles.
Many countries offer tax relief to family businesses which minimize their tax burden on transferring their business to next generation, however, such kind of tax incentives are currently under increased scrutiny or proposed to be modified or removed in the coming future. That means families should be alert to the potential tax obligations arising from those changes. Hence, tax planning, execution and control become the significant elements for planning the overall family businesses transition and establishing robust family governance.
At the same time, COVID-19 is a red flag for managing and protecting the traditional family businesses. Many of them have taken into serious consideration the purpose, value and sustainability of their businesses and how to adapt to this new environment.
AOGB is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in Hong Kong, Japan, Indonesia and India. For more information and advice on transitioning family businesses, you can contact AOGB Professional Services Group.