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The use of corporate credit card in foreign subsidiaries

Alex orlov's Profile


We are in the process of eliminating petty cash in foreign subsidiaries. One option is to introduce US based corp credit card. Expenses will occur in foreign countries but all receipts will be sent back to US and the corp in US will pay credit card company. Are we going to have issues with local tax authorities? 


Thank you for your help.



(Agent, JKS Solutions, Inc.) |

The way I understand the question is that you will be implementing a US purchasing card to be used by foreign subs and the card will be administered by a US credit card company. Hopefully I have that part right.

As with any credit card arrangement you will have to negotiate the credit card fees and other account holder benfits such as air miles. If you are determined to use a US credit card company you will have to pay the high currency translation costs on every single transaction. So when you negotiate the deal, be sure you have a good understanding of the volume of transactions you will be processing and an understanding of how you want the bank to compensate you with other benefits that offset the hard cost of currency translation.

If you can quantify an average monthly volume of charges for each country, give that to the bank in a spreadsheet and have them tell you what the currency translation costs would have been for that month as a rough estimate.

Be sure you get good value for the cost.

Alex orlov
Title: Director of risk management and complian..
Company: LSI, Inc
(Director of risk management and compliance, LSI, Inc) |

Hi Valerie,
Yes, your interpretation of my question is correct. You do bring up additional point to consider, thank you ,so much.


Robert Neyens
Title: Finance Manager
Company: TITAN Containers A/S
LinkedIn Profile
(Finance Manager, TITAN Containers A/S) |

The idea seems to make sense from an controlling point of view. However you need to take into account Valerie's message, maybe the costs outway the benefits.
Secondly you'll need to charge back these expenses to the local entity, this is asking for problems from a tax point of view. More so if the invoices are drafted/booked locally and paid centrally.
You could consider another way of treating this.
Some companies have their employees pay for expenses themselves, either cash or credit card. This way they force them to draft up expense notes with all detail and proff along with it. The company (whomever is in charge/responsible) pays out these expense notes (very fast). The advantages are clear me. To smooth the burden for employees they sometimes get an (permanent) advance on their expenses. They sign for it and for the fact it will be withheld if they leave the company.

Alex orlov
Title: Director of risk management and complian..
Company: LSI, Inc
(Director of risk management and compliance, LSI, Inc) |

Thank you for the response Robert.
Expense allocation/charge backs and local taxes are the main points of my research, so to speak, when it comes to credit card implementation.
So, if we change the billing address from US Corp to foreign sub location it should simplify the process?

Employees paying for expenses themselves and then getting reimbursed via expense reporting process on regular basis would have been my preference as well. However, in some countries people cannot afford to pay for expenses that make up 1/3 or more of their monthly income....

"Cash" heightens the risks highlighted in FCPA and UK bribery Act......

Best Regards,

Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

Why can't you obtain a Credit Card in Country X (or EU), have the invoice sent to the US and pay the invoice thru your Subs bank?

You a) avoided FX charges, b) issues with taxing authorities, and c) maintained some form of oversight

(Agent, JKS Solutions, Inc.) |


You mentioned your solution is meant to handle expenses that were previously handled with petty cash. So I was thinking these expenses were smaller than say trade AP.

From Robert's response I am hearing that if the US parent is the account holder, the chargebacks will indeed cause tax issues.

This is not my area of expertise but there is certainly a growing need to find solutions around payment mechanisms abroad.

I found this Chase Ad that talks about their foreign exchange services.

And this one from American Express

If you contact them, ask them about how they have helped their clients in the are of expense reporting. They may have a good referral or online expense report solution built into their offerings like Wells Fargo does for US based customers.

Let us know what your findings are.


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