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Provide a 1 page analysis while answering the following question: The recent cases of low or zero taxes paid by multinational corporations such as Starbucks, Google and Apple highlight weaknesses in b
Provide a 1 page analysis while answering the following question: The recent cases of low or zero taxes paid by multinational corporations such as Starbucks, Google and Apple highlight weaknesses in both global tax laws and regulations of MNE's. With reference to these weaknesses, how do such companies such little. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Business “A Quest into the Reasons Why Multinational Enterprises Pay Less Tax” Impact
Multinational enterprises contribute significantly to the global economy, and views on their global economic influence are considered along the lines of global taxation. There are extremely large multinational enterprises whose revenue levels surpass the GDP of many countries including nations within the middle income bracket. For instance, Wal-Mart reported $476.3 billion in revenues last year. this figure is higher than Austria’s 395 billion in nominal revenue reported in 2013.
These companies are very productive, and as result they are the targets for the taxmen, who are lured for their supposed high profits which are considered to be ripe for tax generation. Nonetheless, taxmen have raised a red alert over the difficulty in taxing them. Egger, Eggert & Winner (2010) empirical research solidified the belief that multinationals pay very little tax considered in the light of their income. The paradox is that some of these companies market themselves to their potential investors as profitable.
Tax Evasion
This debate initially hinged that the multinationals evade taxes through a manipulation of their financial ratios and prices. However this view has been dismissed by tax experts, terming this view as too simple.
Tax regulations
Low tax remittance could be the direct result of tax law regulations than the earlier view. Certainly, this view is intertwined into the fundamental tenet of international taxation, which is the arms length principle (Dunning & Lundan, 2008). This principle implies that business relations between different subsidiaries of a multinational are considered as if they had occurred between different parties, for tax purposes (Eden, 1998).
Reference List
Dunning, J. H., & Lundan, S. M. 2008. .Multinational enterprises and the global economy.
Cheltenham, Edward Elgar Publishing Ltd.
Eden, L. 1998. .Taxing multinationals: transfer pricing and corporate income taxation in North
America. Toronto, University of Toronto Press.
Egger, P., Eggert, W., & Winner, H. 2010. Saving taxes through foreign plant
ownership. .Journal of International Economics. .81, 99-108.
Great Britain. 2011. .HM Revenue and Customs annual report and accounts 2010-11: (for the
year ended 31 March 2011). London, Stationery Office.
