Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 15
Multinational Tax Management
◼ Learning Objectives
1. Explore the tax principals and practice employed by governments around the globe
2. Examine how multinational firms manage their global tax liabilities
3. Analyze how Google has creatively repositioned its global profits for tax management
purposes
4. Evaluate the relative tax competitiveness of country tax environments globally
◼ Chapter Outline
I. Tax Principles and Practices
A. Tax Morality
B. Tax Neutrality
C. National Tax Environments
Worldwide Approach
Territorial Approach
Tax Deferral
D. Tax Treaties
E. Controlled Foreign Corporations
F. Tax Types
Direct Taxes
Indirect Taxes
II. Multinational Tax Management
A. Allocation of Debt and Earnings Stripping
B. Foreign Tax Credits and Deferral
C. Transfer Pricing
Fund Positioning Effect
Income Tax Effect
© 2018 Pearson Education, Inc.
3. Tax Neutrality. What is tax neutrality? What is the difference between domestic neutrality
and foreign neutrality?
4. Worldwide versus Territorial. What is the difference between the worldwide and
territorial approaches to taxation?
© 2018 Pearson Education, Inc.
5. Direct or Indirect. What is the difference between a direct tax and an indirect tax?
6. Tax Deferral. What is meant by tax deferral in the U.S. system of taxation? What is the
deferral privilege?
7. Value-Added Tax. What is a value-added tax, and how does it differ from an income tax?
8. Withholding Tax. What is a withholding tax, and why do governments impose them?
© 2018 Pearson Education, Inc.
9. Tax Treaty. What is usually included within a tax treaty?
10. Active Versus Passive. What do the terms active and passive mean in the context of U.S.
taxation of foreign source income?
© 2018 Pearson Education, Inc.
11. Tax Types. Taxes are classified based on whether they are applied directly to income—
direct taxes—or to some other measurable performance characteristic of the firm—indirect
taxes. Classify each of the following as a “direct tax,” an “indirect tax,” or something else:
12. Foreign Tax Credit. What is a foreign tax credit? Why do countries give credit for taxes
paid on foreign source income?
© 2018 Pearson Education, Inc.
13. Earnings Stripping. What is earnings stripping, and what are some examples of how
multinational firms pursue earnings stripping?
14. Controlled Foreign Corporation. What is a controlled foreign corporation, and what is its
significance in global tax management?
15. Transfer Pricing. What is a transfer price and can a government regulate it? What
difficulties and motives does a parent multinational firm face in setting transfer prices?
© 2018 Pearson Education, Inc.
