Academic journal article Academy of Accounting and Financial Studies Journal

Taxation of International Business Organizations

Academic journal article Academy of Accounting and Financial Studies Journal

Taxation of International Business Organizations

Article excerpt

HIGHLIGHTS

1. Congress has in the past addressed tax circumvention and avoidance by using tax refuges;

2. International companies can transfer proceeds from high-tax to low-tax territories;

3. Persons can dodge tax on passive income;

4. Changing tax law is essential for addressing profit movement by international firms.

INTRODUCTION

All nations around the world evaluate taxation on business organizations using varying tax systems, rates, compliance requirements and incentive provisions. Different countries evaluate tax on the domestic corporations and its citizens not considering where they earn the revenues. Many nations in the globe evaluate similar kinds of taxes as those of the United States like payroll taxes, consumption taxes, value-added taxes (VAT) and so forth. VAT is more dominant in Europe and contributes much of the governments' total revenues. The approaches of composing taxable income and rates of taxation differ between various countries. The different nations provide for varying methods of depreciation where the straight line approach is more prevalent as compared to the reducing balance method.

In the United States, international business dealings are categorized into two classes. First, there are the outbound transactions in which American nationals and local organizations do business or invest overseas. Second, the inbound transactions involve foreign companies and non-resident alien individuals doing business in the United States. Both of these types of transactions are taxed by the federal government. Without inbound taxation, local business organizations are likely to be disadvantaged as compared to foreign firms doing business in the US in case their foreign taxes are lower as compared to those of America (Barrios, 2012). In totality, taxation is a critical factor to international businesses because investors highly consider it before deciding to invest in a certain region in the world. The article looks into different issues associated with international business taxation. However, the main focal point of the article is international tax avoidance on the multi-national business organizations.

METHODS

The paper uses a qualitative approach to research and it uncovers trends in opinions, thought patterns and facts regarding the issue of taxation in International Accounting. Mainly, the article is based on textual analysis from secondary sources; books, journal articles, government publications and Internet sources in particular.

Materials of Research

The article derives facts from a broad range of academic and administrative works in building on the arguments of international taxation. Firstly, there is the use of journal databases in incorporating factual figures and statistics in the paper. The numbers are in support of the thesis statement of the paper and main argument for which the paper advocates. Secondly, there is the use of scholarly articles as reference points when writing down the paper. Articles have advised a significant part of the document. A majority of the articles are academic while others come from administrative quarters and so they are in the public domain. Thirdly, this paper derives information from professional websites in building on the arguments. It has exploited different online sources that are deemed credible for using in academic work. When borrowing information from a website, it has been important to determine its credibility through establishing the authors. The authors' highest credentials are publicized and are verifiable in a website that is deemed fit for sourcing factual material. Also, credible online sources talk about the publication dates and publishers of the content that they hold. In this sense, it is possible to tell the relevance and validity of the facts that they publish for readers to absorb. Finally, the paper heavily borrows from academic books when applying theoretical knowledge regarding the issue of taxation in the context of international accounting. …

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