Economics 2162A/B Study Guide - Final Guide: Offshore Financial Centre, Income Statement, Foreign Tax Credit

• School: Western University
• Department: Economics
• Course: Economics 2162A/B
• Professor: Desmond Mc Keon

Document Summary

Multinational tax management: p(cid:396)i(cid:373)a(cid:396)(cid:455) o(cid:271)je(cid:272)ti(cid:448)e of (cid:373)ulti(cid:374)atio(cid:374)al ta(cid:454) pla(cid:374)(cid:374)i(cid:374)g is (cid:373)i(cid:374)i(cid:373)izatio(cid:374) of fi(cid:396)(cid:373)"s (cid:449)o(cid:396)ld(cid:449)ide ta(cid:454) burden. In theory, an equitable tax is one that imposes same total burden of taxation on all taxpayers in same tax jurisdiction. Canada taxes all corporations on in-canada income, foreign-source income is not subject to additional tax in canada: capital import neutrality: tax burden on mne subsidiary should be the same regardless of where mne incorporated. Tax equity: tax equity: regardless of country in which affiliate of mne earns taxable income, same tax rate and tax due dates apply. Deferral: many parent companies defer claiming additional income taxes (double taxing) on foreign source income of mne subsidiaries until it is remitted to the parent firm, creates incentive for offshoring jobs. Treaties: tax treaties define whether taxes are to be imposed on income earned in one country by the nationals of another, and if so, how, reduce double taxation, bilateral (applicable only to two parties involved)