Strategic “Go-To” Advisor for Foreign Direct Investments – Global Manufacturer
October 10, 2024
About the Client:
The Client is a manufacturing company based in the Asia-Pacific (APAC) region. The company’s headquarters (HQ) are multinational; its conglomerate group has consolidated annual revenue of over $11.6 billion worldwide. The Client manufactures packaging materials, aluminum-related products, automotive materials, construction materials, and other various consumer and industrial products.
The Challenge:
The Client was interested in expanding the electric vehicle (EV) battery materials supplier arm of its business to the United States. But before pursuing U.S. expansion, the organization needed to seek approval from its board and produce a business plan explaining how its customer base and operations would operate in the U.S. Plans for U.S. foreign direct investment (FDI) are often very multifaceted and have a complex process with many parallel paths and interdependencies to manage.
The Client enlisted Aprio for help with developing its plan and asked the firm to serve as a key advisor and eventually a long-term partner the Client could trust and rely on as it planned to do business in the U.S. Aprio ultimately served as the “go-to” provider of all the Client’s U.S. expansion needs, “connecting-the-dots” for the inbound U.S. business with various expertise from compliance to strategic advisory.
The Solution:
After evaluating the Client’s needs, Aprio identified several services that could help. The International Team served as a single point of contact for the Client, acting as the steward responsible for finding holistic offerings across the firm that fit the Client’s needs at the right time. Aprio provided proactive advisory solutions at each stage of the Client’s expansion journey, addressing the following areas and working in sync with the Client:
- International Desk Functions: A task force team from HQ visited the U.S. and met with Aprio during their visit to enhance their knowledge of the U.S. business landscape, further allowing the Client to produce the business case for U.S. expansion. Aprio was able to be one of the Client’s first points of contact in the U.S. and help provide the connection and care needed for its U.S. expansion plan. Our team also helped introduce them to local community organizations, such as the Southeast U.S. Korean Chamber of Commerce, where Aprio leads the board of directors.
- Site Selection: Aprio helped the Client’s team evaluate and compare tax and accounting implications based on its locations, geographies, and facilities to potentially house the U.S. arm of its EV battery business.
- State and Local Tax Review: Aprio provided insights on what state and local tax (SALT) obligations and incentives the Client was eligible for in the U.S.
- Entity Setup: Once the Client received board approval for U.S. expansion, Aprio connected the organization with other U.S.-based professional advisors, including an attorney, insurance provider, banking representative, and various trusted partnerships that could help the organization navigate the entity setup process. Aprio helped review the Client’s tax structuring plan in the U.S., coordinated with the HQ team’s global tax structuring plans, and provided simulation advisory services based on mid-to-long-term business goals.
- Specialty Tax Review: Aprio helped the Client navigate the tax implications of their CAPEX plan and the construction of a $400 million+ manufacturing site. Aprio introduced the Client to our Cost Segregation Team, who performed an assessment of the recent IRS 48C/45X federal tax credit benefit (for clean energy projects). From there, Aprio provided guidance and helped the Client identify the right analysis for its U.S. expansion plan. By providing specialty Cost Segregation services, Aprio helped the Client stay compliant with tax obligations and develop valuable tax-saving strategies. In addition to specialty tax review, Aprio also provided accounting guidance to help the Client set up its plant, such as reviewing the Client’s internal asset capitalization policy and depreciation, which helped the team with financial reporting. In the coming months, Aprio also plans to perform an initial R&D tax assessment and a Section 174 review.
- Global Mobility: Aprio’s Global Mobility team helped the Client ensure its expat payroll was set up correctly, including reviewing the relevant tax treaty and global HR policy implications for employees working in its U.S. operation.
- Tax Compliance: Our team helped the Client prepare its first and subsequent tax filings, providing subject matter expertise on the complexities of inter-company transactions and multinational tax reporting compliance for both the Client and individual expats.
- Transfer Pricing: Aprio helped the Client review its transfer pricing policies with its parent company and adjust them to maintain compliance. In the future, the Client expects to benefit from benchmarks in the U.S. as it starts operating its business. The Client also plans to perform transfer pricing studies and updates periodically.
- Customs and Duty Compliance: The Client imported many of the raw materials used to construct EV batteries from its parent company located in the APAC region. Aprio helped the Client understand its duty and customs implications — all the way from machinery to the raw materials it sourced — as well as U.S. CBP and international trade commission tariff complexities. Upon reviewing the Client’s plans, Aprio successfully filed the Section 232 aluminum tariff exclusion with the commerce department (BIS); as a result, the Client expects to save $3 million and strengthen its compliance on imports.
- Audit and Assurance: Aprio helped the Client connect with its parent company’s auditors to develop the right risk-based audit plan. By coordinating with the parent company’s consolidation team and auditors, the Client created seamless cohesion for key users of its financial statements for FDI projects. Aprio’s International Team had the knowledge and experience to understand the accounting operations and consolidation implications of the Client’s global subsidiaries. Our team provided valuable insight to the Client’s parent company and the assurance local subsidiaries needed to perform an audit that satisfied U.S. GAAP and IFRS standards.
- Internal Controls: In the Client’s home country, companies above a certain threshold may have to meet an internal control requirement from their parent companies and their subsidiaries in scope. Aprio help the Client review appropriate internal controls (ICFR) and SOX-mandated guidance to ensure internal controls effectively met the home and host countries’ requirements.
The Result:
Thanks to Aprio’s interconnected services, International Desk function, and coordinated approach, the Client was able to work with one team to navigate every aspect of its U.S. business expansion project. In addition, Aprio’s integrated team provided in-depth industry and cultural knowledge that helped the Client feel comfortable throughout the process. The team connected the organization to several trusted professional advisors that could help facilitate other aspects of their expansion.
Aprio’s International team successfully helped the Client set up, get acclimated, and grow their business in the U.S. — and the journey has only just begun.
If you are interested in learning how Aprio can help your business establish inbound U.S. operations and navigate all aspects of the FDI journey, contact us today.
Jae Kim
Senior Manager, Assurance Services
Jae.Kim@aprio.com
770-353-5326
Recent Articles
About the Author
Stay informed with Aprio.
Get industry news and leading insights delivered straight to your inbox.