The HICOOL 2024 Global Entrepreneurs Summit kicked off in Beijing on August 23, 2024, with the theme "New Quality Leading, Innovation and Integration." The summit aims to gather global innovative technology resources and has attracted technology innovation companies from countries such as Australia, Germany, France, and Thailand.

As a professional digital service provider, ARTxDIGI was represented by its partner, Grace Shi, who delivered a speech titled "Digitalization: A Must for Multinational Companies to Comply in Europe." In this speech, Grace Shi delved into the challenges multinational companies face when ensuring financial and tax compliance in the EU and provided a series of suggestions and solutions.

Key Topics Covered:

1. Risk Management and Digital Compliance Considerations for Multinational Companies
2. Financial and Tax Compliance Risks for Multinational Companies in Europe
3. Looking Ahead: The Impact of ESG and Carbon Tariffs on Multinational Companies Operating in Europe and How to Respond
4. Financial and Tax Considerations for Multinational Operations in the Pharmaceutical and Medical Device Industry

Risk Management and Digital Compliance Considerations for Multinational Companies

In the context of globalization, with the rapid rise of the global platform economy, cross-border e-commerce and digital taxation have become significant trends in global tax compliance. To address the tax challenges posed by the platform economy, the EU has introduced two key reform proposals: "VAT in the Digital Age" (ViDA) and customs union reform. These proposals aim to expand the scope of tax obligations, including platforms operating in the short-term accommodation and passenger transportation sectors. Additionally, e-commerce platforms will be responsible for collecting VAT on all goods sold within the EU, regardless of the buyer's identity or the supplier's location.

Moreover, the implementation of real-time compliance has introduced a series of new challenges for corporate tax systems, one of the most common being mandatory electronic invoicing (e-invoicing). This means companies must issue invoices in a structured, machine-readable format and report invoice data to the government. Real-time compliance requires companies to have the capability to capture and transmit transaction data promptly, placing higher demands on their financial and tax management systems. Companies need to invest in advanced technological solutions to ensure compliance with the e-invoicing and real-time compliance requirements of different countries. Furthermore, since e-invoicing regulations may vary from country to country, companies must stay up-to-date with these changes and ensure that their invoicing and reporting processes align with each country's requirements.

Financial and Tax Compliance Risks for Multinational Companies in Europe

As the types of sales taxes increase, companies face growing challenges in tax compliance. In addition to managing traditional sales taxes, companies must also navigate various newly introduced tax types and incentives. Cross-border transactions often involve tax treaties, domestic tax regulations, and the tax regulations of the investment country, involving multiple entities both domestically and internationally. In specific tax handling, issues such as income recognition, expense deduction, tax incentives, and transfer pricing need to be addressed. For major project investments, typically with long cycles, tax handling becomes even more complex. For companies engaged in cross-border transactions, it is essential to meticulously follow tax treaties and regulations to find the correct compliance path in complex transactions.

Given the global trends in financial and tax regulations, a comprehensive and secure digital tax system is crucial for multinational companies. Digital systems can efficiently collect, organize, and analyze large amounts of data, helping multinational companies better understand and meet European compliance requirements. Through real-time data monitoring, companies can quickly identify potential compliance risks and take corresponding preventive measures. By automating many tedious compliance processes, such as generating data reports, archiving documents, and updating records, companies can not only reduce human errors and improve work efficiency but also lower the risk of fines or legal disputes due to compliance issues. Digital systems help companies establish more comprehensive risk management and internal control mechanisms. By presetting rules and algorithms, the system can detect and report abnormal behavior or potential risks in real-time, ensuring the company's operational compliance.

Looking Ahead: The Impact of ESG and Carbon Tariffs on Multinational Companies Operating in Europe and How to Respond

With increasing emphasis on environmental protection by the EU and other countries, ESG (Environmental, Social, and Governance) has become an investment philosophy and a corporate evaluation standard. It emphasizes that while pursuing economic benefits, companies must also focus on environmental protection, social responsibility, and corporate governance. For multinational companies, this means they need to pay more attention to sustainable development, incorporating ESG factors into their strategic planning and daily operations. ESG compliance requires companies to adhere to relevant regulations and standards, improve environmental management, protect employee rights, and strengthen corporate governance structures. This helps enhance the company's social reputation and brand image, thereby building trust with consumers and investors.

Financial and Tax Considerations for Multinational Operations in the Pharmaceutical and Medical Device Industry

When entering the European market, medical companies face complex financial and tax planning challenges. This includes carefully designing equity structures to optimize tax efficiency while meeting economic substance requirements, understanding and utilizing various tax incentives, including corporate income tax exemptions, VAT exemptions or zero rates, and bilateral tax treaties, with a focus on the tax treatment of intangible assets. Strengthening ESG reporting and improving the company's performance in environmental, social, and governance aspects to meet international standards and market demands, while ensuring comprehensive financial and tax compliance through proper declaration and the establishment of effective internal control and risk management systems. Companies also need to pay attention to the latest developments in international tax regulations, such as the EU's Foreign Subsidies Regulation, to address tax risks in cross-border transactions. By implementing digital management and regularly consulting with professionals, medical companies can reduce tax costs, mitigate risks, and enhance their competitiveness and brand reputation in the European market.

Innovative digital solutions for the pharmaceutical industry provide a comprehensive set of operational management tools designed to help companies navigate globalization. These tools include RM+ marketing management systems, supply chain and production management systems, and R&D project management, optimizing the company's core operational processes. For the unique needs of pharmaceutical companies, they offer integrated chemical structure editors, electronic lab notebooks, full lifecycle management of laboratory equipment, regulatory-compliant quality management systems, and clinical trial project management. Additionally, global financial and tax compliance management covers support for multiple languages, currencies, standards, and tax rates, as well as various payment processing solutions, ensuring that companies can meet global compliance requirements. By tracking carbon footprints and emissions, as well as carbon asset accounting, these solutions help companies achieve environmental responsibility and sustainable development goals, fully supporting the overseas expansion strategy of medical companies and ensuring their seamless growth in the global market.