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International Taxation Rules on International Companies - Essay Example

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Many developed and developing countries have been party to various political and economic conventions, organizations, protocols, and agreements, specifically designed to enhance trade and economic development among member states. Besides helping nations to settle their disputes amicably without necessarily resulting to war like it happened in World Wars I and II, these organizations and treaties have been key in ensuring that international trading and economic standards are maintained for the benefit of all nations (Rawal, 2006)…
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International Taxation Rules on International Companies
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Download file to see previous pages The OEEC was later rearranged into the Organization for Economic Cooperation and Development (OECD) in 1961. Today, the OECD is made up of thirty countries that accept the principals of free market economy and representative democracy (Owens, 2008). Most OECD countries are developed countries, with high-income countries. Some of its members include France, United Kingdom, United States, Denmark, Finland, Spain, Sweden, Italy, Japan, among others.
The functions of the OECD are multifaceted. But for the purposes of this discussion, it is only imperative to mention that, OECD functions as an intergovernmental organization which aims at coordinating economic development of members as well as non-member nations through trade liberalization, multilateral trade, and economic reform. The organization also covers economic and scientific research, technology transfer, international terrorism, and economic and statistical information (OECD, 2007).
As much as the OECD would want to come up with proper legislation and...
For example, most developed nations have zero or low taxes for certain types of groups. As such, the organization has found itself leaning more on international taxation rules in its operations. This is because many corporations may have interests in several countries that employ different tax regimes (Doenberg & Hinnekens, 1998). A good example would be the Multinational corporations, which must employ the services of an international tax specialist to decrease the global tax liabilities. Tax laws from different countries around the world affect companies and individuals with assets and income in more than one nation differently.
Tax laws vary in different nations as to what income is taxable and how it is measured, who or which entity is taxable, when deductions are allowed and income is taxed, what deductions are allowed from the taxable income and the tax rates. These variations, if not well controlled may bring a scenario where the same income of an international company is taxed by different countries (Larkins, 2004). This is better known as double taxation. As such, there is need for international tax planning to take care of the loopholes occasioned by the above named variations among countries. How then must international companies be taxed rationally
The concept of international tax planning and law has gained considerable attention from the perspective of tax authorities as well as from the taxpayers. The OECD has played an active role in the creation of international tax rules to help businesses move away from double taxation, intractable disputes, and uncertainty (Owens, 2008). According to Mr. Jeffrey Owens, a director of OECD in tax policy administration, improper tax rules can discourage international activity, discourage investment, and ...Download file to see next pagesRead More
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