Question

“WakeUP”, a Mississippi company that produces coffee products, sells their products throughout the United States and is considering expanding its business into Europe. If so, they will have income derived from sales to US Customers and income derived from sales within Europe. Assess the impacts that selling their products abroad will have to WakeUP and any tax incentives that will apply to their situation.

Answer 1

According to the given question,

With all the provisions at hand, its good to expand business to other countries .Selling the products abroad have their own factors

1) Forex risk: currency crisis in the other country may impact your exports. A strong dollar may weaken the buying capacity in other countries. If dollar is weak then it may help boost profit by sales in other countries. But WakeUP always need to assess and hedge its fx risk

2) Competition and brand name: Selling abroad means facing local competition which is more aware of local needs and desires.

3) WakeUp needs to broaden its marketing as per various regions and languages in EU region as opposed to US. Marketing needs to be strong and relevant to establish WAkeUP as a emerging brand. It will help WakeUp to have MNC status

EU VAt is a consumption tax applied on imported products. It is important to understand VAT from compliance regulations . moreover WakeUp needs to understand GST implications in different EU territories as well.