Abstract
Multinational companies transfer profits to countries with low tax rates via tax planning. In response to the request from G20 nations, the OECD launched a total of 15 BEPS (Base Erosion and Profit Shifting) actions, hoping to prompt the reform in tax systems in different countries. This paper conducts a case study in the examination of taxation differences created by multinational companies by leveraging various tax rates in different countries. Expert interviews are conducted to examine the adjustments and responses of tax planning and investment structures in the corporate world in the wake of the amendments to CFC and PEM tax codes, as well as the correlation between tax revenues and economies. Finally, this paper presents suggestions so that taxes and profits are operated in a fair and efficient environment. This will benefit economic developments and promote effective resources utilization.
Highlights
The pursuit of national interests and economic gains has resulted in differing tax rates and trade wars between countries
In response to the request from G20 nations, the OECD launched a total of 15 BEPS (Base Erosion and Profit Shifting) actions, hoping to prompt the reform in tax systems in different countries
This combined with the measures governing Controlled Foreign Companies (CFC) and Place of Effective Management (PEM) increases the risks associated with global tax audits on multinational companies who seek to retain profits with offshore entities and allocate profits not consistent with economic substance
Summary
Received: September 11, 2019 Accepted: September 23, 2019 Online Published: October 17, 2019 doi:10.22158/jbtp.v7n4p155
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