Question

Even with defined rules and treatments, as well as processes established in tax treaties, differences of opinion and disputes develop when taxing jurisdictions overlap.

Please respond to all of the following prompts:

Please discuss some of the common factors and transaction types that arise for a multinational company that may create issues.

Does the international taxing structure operate efficiently and fairly? Explain.

What areas of the international taxing structure need improvement and how could it be improved?

URGENT: NEED ANSWER ASAP

PLEASE RESPOND WITH COPY AND PASTE, NOT ATTACHMENT USE ORIGINAL CONTENT NOT USED BEFORE ON CHEGG

PLEASE ANSWER THROUGHLY TO ALL ANSWER TO BEST ABILITES ORIGINAL SOURCE NEVER USED BEFORE!!! NEW RESPONSE NOT USED BEFORE PLEASE!!

Answer 1

Common factors and transaction types creating jurisdictional issues:

A) Multiple country operations:

The MNC operates and has assets in more than one country. The problem of which country's right it is to tax the income base arises in such a scenario.

B)Intrafirm trading:

An MNC integrates associates across the world resulting in intrafirm trade .This can lead to ample opportunities for concealing income and reduce taxes as a whole.

C) Goal differentiation:

A MNC aims at maximizing profits on a global basis just like any other business. In doing so, it can push certain profits away from a national boundary so that a particular government cannot tax it.Under- taxation thus becomes a problem.

The international taxing structure strives hard to be fair as it follows the ability to pay concept in most countries which effectively means the more a person earns, the more taxes he/ she has to pay.Since the taxes are used by the government's for the well being of the people, the international taxing structure ultimately aims at economic equality.

Areas of improvement:

A) Specific Norms to avoid cross border tax planning and evasion of taxes.

B) A more comprehensive way of deciding the place of taxation for digital businesses rather than just location based taxation as it is becoming increasingly difficult to determine the place at which the profits accrue.