Tải bản đầy đủ - 0 (trang)
II. INTERCOMPANY FUND-FLOW MECHANISMS: COSTS AND BENEFITS

II. INTERCOMPANY FUND-FLOW MECHANISMS: COSTS AND BENEFITS

Tải bản đầy đủ - 0trang

INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

C.

Inter-company Fund Flows

1. Tax Factors:

a. Taxes available on

1.) corporate income

2.) personal income

(includes dividends)

b. U.S. Tax System

tax income remitted abroad

on corporate income tax.

9



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

c. Offset:

Foreign tax credit given on

income already tax.

2. Transfer Pricing

a. Definition: pricing internallytraded goods for the

purpose of

moving profits

to a more tax-friendly

nation.

10



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

b.



Uses of Transfer Pricing

1.) Reduces taxes paid

2.) Reduces ad valorem



tax

3.) Avoids exchange

controls

11



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

3. Reinvoicing Centers

a. Set up in low-tax nations.

b. Center takes title to all gods.

c. Center pays seller/paid by buyer

all within the MNC.

d. Advantages:

1.) Easier currency changing

2.) Other invoice currency,

other than local, available.

12



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

e. Disadvantages of Reinvoicing

1.) Increased communications

costs

2.) Suspicion of tax evasion by

local governments.

4. Fees and Royalties

a. Firms have control of payment

amounts.

b. Host governments less suspicious.

13



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

5. Leading and Lagging

a. Highly favored by MNCs

b. Value depends on opportunity cost

c. No need for formal debt

d. Less chance of local government

suspicion.

14



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

6. Intercompany Loans

a. Useful when following

present:

1.) Credit rationing

2.) Currency controls

3.) Differential tax rates

15



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

b. Types of Inter-company Loans

1.) Back-to-back loans

a. )

Often called fronting

loan

b. )

Loan channeled through

a bank

c. )

Loans collateralized by

parent deposit.



16



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

c.)



Advantages

(1.) protects against

confiscation

(2.) reduces taxes

(3.) accesses blocked funds

2.) Parallel loans

a.) Consists of 2 related but

separate loans with 4 parties in

2

nations.

17



INTERCOMPANY FUND-FLOW

MECHANISMS: COSTS AND BENEFITS

b.)Purpose of parallel loan

(1.)

repatriate blocked funds

(2.)

avoid currency controls

(3.)

reduce currency exposure

7. Dividends

most important method of

transferring funds to parents

18



III. DESIGNING A GLOBAL

REMITTANCE POLICY

III.



DESIGNING A GLOBAL

REMITTANCE POLICY

A. Factors:

1.

Number of financial links

2.

Volume of transactions

3.

Ownership patterns

4.

Product standardization

5.

Government regulations

19



Tài liệu bạn tìm kiếm đã sẵn sàng tải về

II. INTERCOMPANY FUND-FLOW MECHANISMS: COSTS AND BENEFITS

Tải bản đầy đủ ngay(0 tr)

×