In this unit we learn about several and important taxes as well when they are applied. There are too many kinds of taxes some are like incentives others not.
When we talkabout multinational corporations, tax planning has become an extremely complex affair. There are too many countries involved and thus a web of tax regulations.
Now we learn that taxes have a veryimportant impact on foreign direct investment decisions as well bodies and cartels do. Taxes determine the financial structure of a subsidiary, and they will influence pricing decisions. It’s veryimportant to now that the absence of a tax treaty between the country of a would-be investor and the nation where a foreign investment is to take place might lead to cancellation of investments plans.
Inthis unit we learn the different tax systems in the world and their impact on an MNC’s global strategy.
We can divide taxes in to kinds; direct, that is a tax levied on individuals and corporations.Indirect, is a value added tax, such as a sales tax or import duty.
Taxes vary if the country is developed or less developed because the last ones have lower corporate tax rates, in order to attractforeign investments.
Countries depending on their needs they create or allow taxes that can give them earnings or facilitate trade with other countries.
There is a tax very important that also wonrecognition in the European common market, is the value-added tax. The tax is assessed in proportion to the value added during that stage. The VAT system offers advantages, such as rebates on exports.Profitable and unprofitable firms are taxed alike, as there is no possibility of tax deductions to determine taxable income.
When countries initiated a system of tax incentives can be divided into threegroups. One consists of developed nations, other is the less developed countries, the last one consists of tax haven countries.
Tax haven, VAT and Tax Holidays have come under severe criticism...