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Assignment 3: International Taxation and Foreign Tax Credits
Finance & Accounting
Pages 4 (1004 words)
Assignment 3: International Taxation and Foreign Tax Credits Name Institution Assignment 3: International Taxation and Foreign Tax Credits Types of organizations that a US-based taxpayer could establish abroad and the various tax impacts that these types of organization may cause An intercontinental tax strategy starts with selecting the type of entity to be considered.
This will in effect be a form of double taxation (Hines & Rice, 1994). A strategy for a US-Based taxpayer to repatriate earnings from the foreign markets and avoid or mitigate the U.S. tax impact on repatriation Lots of profits that most taxpayers in the U.S attribute to mitigate or avoid taxes should be taxed up to about 35% when they are repatriated. In this context, the client can repatriate his earnings from the business abroad and at the same time avoid taxes using the “Cash Hoards” strategy. The fact that U.S has cash hoards indicate that investment is not being hindered by lack of cash. The tax payer can thus bring money back home by shifting income through transfer pricing, a strategy that will allow him to assign costs to subsidiaries in high-tax nations and profits to tax heavens. The technique can work effectively putting in mind an example set by Google, a company that reduced its taxes by about$3.1 billion in the last three years by shifting most of its earnings attributed abroad eventually to Bermuda. ...
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