Tax Avoidance & Firm Growth
What follows in the next few pages is a review of whether there is a correlation between tax avoidance with corporations and firm growth. Indeed, looking at the literature reveals that the evidence is mixed but that the overall answer is a condition "yes," that there can indeed be a link between tax avoidance and firm growth. To explain the conditional nature of the answer garnered, one can look to the work of Desai, Foley and Hines (2006) when they assert that "firms with sizable foreign operations benefit the most from using tax havens, an effect that can be evaluated by using foreign economic growth rates as instruments for firm-level growth of foreign investment outside of tax havens" (Desai, Foley & Hines, 2006). They further state that "one percent greater sales and investment growth in nearby non-haven countries is associated with a 1.5 to 2% greater likelihood of establishing a tax haven operation" (Desai, Foley & Fritz, 2006). An alternating viewpoint offered by Desai and Dharmapala states that...
For example, investors in certain types of real estate investment trusts (REIT's) are able to pay no corporate income taxes on those investments so long as a substantial majority of the profits are paid out to investors. This fact alone would correlate to higher growth than if the REIT tax write-off was not present (Fisher, 2002). In that same vein, many firms make use of investments and tax shelters that are tax at the lower capital gains rate rather than corporate income rates, thus an automatic net gain in profits and growth in many cases (O'Neill, 2012). A similar example that shows that at least some forms of tax avoidance and/or in certain types of firms would be tax loopholes for domestic production activities. Firms that make use of those loopholes often realize very promising corporate growth rates in terms of profits, employee headcount and overall revenues (Coy, 2012).
Another example, albeit limited, where a firm can grow itself and reduce its taxes at the same time is what Burger King was pilloried for trying to do in 2014. It was discussed that they would…
Taxation Advice for a Multinational Corporation The impact of currency values on commercial operations is a familiar topic for the international accountant. Much of the attraction of currency markets stems from its synthesis of all aspects of the world economy distilled into a single, digestible value. The significance of relative currency values rests primarily on their relationship to world markets and their interaction with international trade, investment, and monetary practices. A
Tax Revenues The author of this report is tasked with describing how to compensate and direct the tax collectors of Elbonia to increase tax collections in a way that is effective and compensates the tax collectors commensurate with the work they are performing and the dollars that they are bringing in. The author of this report will offer a few options that will probably help a lot and a lot of
global tax treaties, UN model and OECD model with the view of analyzing their consideration towards rights to capital and tax income. By throwing light on differences and similarities among the models, the fundamental logic of each of them is explained. The article explains the prospecting policies of consideration when tax treaties are to be signed. It is because there is strong need to enforce a flexible but more
The other side of this is that the companies have to spend finances in areas of language training or job training when they outsource. However, over the years, many U.S.-based companies haven't been discouraged by these additional costs because the overall costs of outsourcing with the job training session and language teaching and outplacement requirements are still far less when compared to the costs that they would have to endure
HSBC is one of the world's largest banks, and it has the third-largest market share among UK retail banks. This massive global footprint supports a differentiation strategy that is encapsulated by the "the world's local bank" slogan. HSBC plays to its strengths with a presence in many major markets around the world, but its strength in retail and commercial banking belies a relative weakness in investment banking. The banking industry is
Bny Mellon-Union Avoidance Program BNY Mellon Human Resource Management rights to avoid union program Severance of benefits and wages Monetary losses Non-availability of unemployment insurance Limited monetary benefits paid by unions Economic implications for the company Referendum on Unionization Restructuring wage structure During a union organizing drive in any organization, it is the right of company's management to convince their employees of the potential benefits that not being part of a union may have for both the company as well