Overseas investments can lead to a higher return. But there’s also the possibility of high transaction costs, currency depreciation and cultural miscommunication. I believe maximised opportunities come from minimised risks. That’s why it’s so important to address the risks in overseas investments.
Investing in a foreign market can be a scary prospect for many investors. The stock market and exchange rate are both unpredictable. Purchasing a property abroad? The penalties are extremely high if you miss a deadline on a document or payment.
It’s not enough to have someone who just does their due diligence and ticks the boxes on your paperwork. If you are looking for successful investment or real estate transaction then you need someone with years of experience to negotiate the finer details for you.
Firstly, based on where you are planning to do business, transaction costs vary widely.
Depending on the manner of investment, stamp duties, taxes, levies, loans or exchange fees can all mount up. Ultimately, small tax percentages can result in huge expenses if they are not considered in the planning stage. That could set you back tens or even hundreds of thousands of dollars. These issues are made worse if there is a language barrier or culture clash between parties.
Secondly, minimising and managing risks in overseas investment takes careful work.
Accordingly, a keen attention to detail is necessary to manage the paperwork and keep up to date with fees and taxes. It can be beneficial to deal with paperwork in person. Recently, I flew to Jakarta to deliver crucial file documents for a client’s investment. If I had sent the documents via post or courier, it would have added days onto the procedure. Any delay can result in additional costs to the client, and that can add up to thousands or hundreds of thousands of dollars per day.
For this reason, you need someone with the right connections who is willing to go the extra mile to help you manage investments successfully!
Finally, you need an experienced tax accountant.
It’s important to have an experienced tax accountant and lawyer based in the jurisdiction where the investment is as well as one in the jurisdiction where profits will eventually be kept. These experts use a tax-efficient structure and oversee the legal aspects of your project, so you enjoy a simple and streamlined process from beginning to end.
To maximise the returns and minimise your risks in overseas investments, you need:
- All legal documents examined with acute attention to detail
- Strong support and tailored guidance for the protection of your assets
- Advice for hedging your risks
- Guaranteed timely transactions for a smooth financial process
Author: Sam Choong
Sam Choong is a lawyer practising in Penang, Malaysia. His areas of practice include estate planning, wills and UK inheritance tax for expats residing or seeking to retire in Malaysia.