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Data Privacy Across Borders

Updated: May 24, 2023

With the advancement of technology, globalization has happened in business which have led them to spread their outreach internationally. Entities are engaging in transactions across their country borders with companies having their place of business in some other country. A cross border transaction is a business transaction between two or more entities who are based in two or more different countries and jurisdictions. These transactions can be in the form of exchange of services, supply of goods, mergers, acquisitions, increasing their market reach/valuation.

With cross border transactions, entities are likely to face a number of issues which maybe legal or otherwise such as difference of culture of the parties involved in the transaction. It involves being aware of the opposite party’s culture when negotiating contracts and showing an accepting front to get amicable results. Another issue is the difference in the legal systems of two different countries. Such transactions would involve different governing laws with different interpretations which may impact the enforceability of an agreement. Companies involved in cross-border transactions also have to deal with tax implications. Tax laws are different across different countries. Additional taxes may be applicable if you are doing business in more than one country or while entering into a contract with another entity based in a different country. Double taxation avoidance treaties have been signed between nations to avoid the problem of double taxation. However, such treaties are country specific and may not always apply to a particular entity or a transaction.

A major issue with cross border transactions is related to data privacy and protection. Every second unimaginable amount of data is being processed and transferred and stored over the cloud. Businesses have become digital while working online every step of the way. In cross border transactions a humungous amount of individual data is being circulated among different entities and not just within the individual’s country of residence but across the world. This often results in breach of privacy of data. To regulate the processing of data, countries have formulated their own data protection laws. Countries such as US, UK, Australia, India, Japan and others have adopted strict data privacy laws.

A cross-border data protection law protects the movement of data from one country to another. The General Data Protection Regulation came into effect in May 2018. This law brought stringent rules to protect personal data. It covers not just the European Union but other countries as well. It prohibits the transfer of citizen’s information unless the country where it is being transferred to has sufficient data protection and the data exporters have safety nets in place.


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