scholarly journals Income Tax and Capital Structure of Multinational Corporations

2020 ◽  
Author(s):  
Deqiang Deng ◽  
Rui Shao
Keyword(s):  
Capital Structure ◽  
Multinational Corporations ◽  
Income Tax

scholarly journals Measuring the Effects of Corporate Tax Cuts

2018 ◽  
Vol 32 (4) ◽  
pp. 97-120 ◽  
Author(s):  
Alan J. Auerbach
Keyword(s):  
Multinational Corporations ◽  
Income Tax ◽  
Capital Investment ◽  
Corporate Income Tax ◽  
Tax Law ◽  
Corporate Tax ◽  
The Law ◽  
Jobs Act ◽  
The Impact ◽  
Tax Cuts

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the changes in the treatment of traditional “C” corporations—those corporations subject to a separate corporate income tax. Beginning in 2018, the federal corporate tax rate fell from 35 percent to 21 percent, some investment qualified for immediate deduction as an expense, and multinational corporations faced a substantially modified treatment of their activities. This paper seeks to evaluate the impact of the Tax Cuts and Jobs Act to understand its effects on resource allocation and distribution. It compares US corporate tax rates to other countries before the 2017 tax law, and describes ways in which the US corporate sector has evolved that are especially relevant to tax policy. The discussion then turns the main changes of the Tax Cuts and Jobs Act of 2017 for the corporate income tax. A range of estimates suggests that the law is likely to contribute to increased US capital investment and, through that, an increase in US wages. The magnitude of these increases is extremely difficult to predict. Indeed, the public debate about the benefits of the new corporate tax provisions enacted (and the alternatives not adopted) has highlighted the limitations of standard approaches in distributional analysis to assigning corporate tax burdens.

scholarly journals Income Tax Complexity Faced by Multinational Corporations: A Comparative Study of Canada, the United States, and Other Selected OECD Countries

2021 ◽  
Vol 69 (3) ◽  
pp. 745-790
Author(s):  
Susann Sturm
Keyword(s):  
United States ◽  
Multinational Corporations ◽  
Income Tax ◽  
Transfer Pricing ◽  
The United States ◽  
Oecd Countries ◽  
The Us ◽  
Tax Complexity ◽  
Medium Level ◽  
Foreign Corporations

This study examines the complexity of Canada's corporate income tax system from the perspective of multinational corporations and compares it with the complexity of the US system, also taking into account measures of complexity for 19 other member countries of the Organisation for Economic Co-operation and Development (OECD). The author finds that with regard to the Canadian tax code, the most complex laws are those on corporate reorganization, transfer pricing, and controlled foreign corporations, and with regard to the Canadian tax framework, the most complex areas are tax audits, tax-law enactment, and tax guidance. In comparison with other OECD countries, Canada is remarkably similar to the United States. Both countries have a medium level of overall complexity, and both have a more complex tax code but a less complex tax framework than other countries. However, a closer examination of the Canadian and US tax codes and tax frameworks reveals some significant differences in complexity levels, particularly in respect of certain tax laws.

In Lieu of GILTI

2021 ◽  
Vol 22 (3) ◽  
Author(s):  
Christine Davis
Keyword(s):  
United States ◽  
Multinational Corporations ◽  
Income Tax ◽  
The United States ◽  
Tax Planning ◽  
Net Income ◽  
Economic Competition ◽  
Business Operations ◽  
Planning Technique ◽  
The U.S

Prior to the 2017 tax reform (TCJA), with a few exceptions, the United States only taxed the foreign income of its domestic corporations when profits were distributed to its U.S. shareholders as dividends. Through this policy, the United States supported its domestic corporations’ active overseas business operations by allowing equal economic competition with foreign entities without the additional burden of paying the U.S. income tax. However, corporations were able to use this ability to electively defer U.S. tax on foreign income as a tax planning technique, which, in part, contributed to the accumulation of large amounts of untaxed “offshore” earnings by U.S. multinational corporations. The U.S. Congress essentially terminated deferral and this tax planning technique when it enacted the current tax on global intangible low-taxed income (GILTI) as part of the TCJA. But GILTI is a formulaic calculation that taxes income regardless of the taxpayer’s intent, use of profits, or the income’s potential for aggressive tax planning. Although GILTI protects against the use of aggressive tax planning techniques, it compromises the tax policy goal of allowing U.S. corporations to compete in foreign jurisdictions unhindered by the U.S. income tax. In lieu of GILTI and the section 245A deduction, this Article proposes a new Subpart F inclusion for excessive unrepatriated earnings based on the concept of distributable net income. This proposal would be superior to the current GILTI regime because it would allow multinational corporations to use deferral for the beneficial goal of supporting foreign active business operations, but would prevent the use of deferral for tax planning purposes.

The Effect of the Degree of Internationalization on Capital Structure for Listed Multinational Corporations in Taiwan during the Asian Financial Crisis

2005 ◽  
Vol 08 (03) ◽  
pp. 447-466 ◽  
Author(s):  
Hsien-Chang Kuo ◽  
Lie-Huey Wang
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Multinational Corporations ◽  
Asian Financial Crisis ◽  
It Industry ◽  
Industry Effect ◽  
Tangible Assets ◽  
The Times ◽  
International Financing ◽  
Degree Of Internationalization

This paper examines the effect of the degree of internationalization on capital structure for multinational corporations (MNCs) in Taiwan during the Asian financial crisis in 1997 by using dummy variables in a multiple regression analysis. The results show that: (1) For the IT industry, the higher the internationalization is, the higher the leverage will be, but it is the reverse for the NIT industry. (2) There is an industry effect on tangible assets, sales size, return on total assets, current ratio, and the times of interest earned, while the collateral value of assets is more significant for the NIT industry than the IT industry when MNCs make capital structure decisions. (3) There is an internationalization effect on the collateral value of assets, profitability, and liability payment ability. For low-internationalized MNCs, firm size and profitability are the important capital structure determinants, but for high-internationalized MNCs, the collateral value of assets is a key element of leverage decisions. (4) The liquidity risk caused by the Asian financial crisis allows the collateral value of assets and liability payment ability be the important determinants when MNCs make capital structure decisions. Finally, the results also express that international outsourcing and international financing play a somewhat important role for the IT industry during successive industry development.

scholarly journals States Interests Legal Ensuring in the Field of Cross-Border Digital Services Taxation

2021 ◽  
pp. 18-26
Author(s):  
Volodymyr KOROL
Keyword(s):  
International Economic ◽  
Multinational Corporations ◽  
Income Tax ◽  
Action Plan ◽  
Corporate Income Tax ◽  
Digital Services ◽  
The Usa ◽  
The Common ◽  
Business Entities ◽  
The One

The article continues the series of studies in the field of international economic (tax) law relating to the barriers and prospects of multidimensional action plan BEPS initiated by OECD and G-20 implementation. It’s dedicated to the issue of the states’ economic interest ensuring in the field of digital services taxation of non-residents exporting such kind of services to the business entities and physical persons without paying any direct corporate income tax. Above mentioned issue is considered on the multilateral level initially taking into account the most significant concept and legal drafting within Action 1 «Tax Challenges Arising from Digitalization» of multidimensional action plan BEPS initiated by OECD and G-20. Attention is focused, particularly, on the basic value creation concepts as well as intentions to modify long-standing approaches and to introduce novelties regarding identification of nonresidents-importers’ nexus to the territories of the states under absence of their permanent establishments. Regional level became the context of issue researching, on the one hand, UE institutions legislative initiatives relating to directive drafting aiming at new tax on gross income of digital services on the common market big companies-providers introduction, on the other hand, negative reaction of several member states towards such initiative on behalf of their companies which are digital services leading exports. Special attention has been given to the national legislation level with respect to unilateral actions of the power bodies of France, being one of the primary European integration apologist project, resulted in special law adoption. Its rules introduced new corporate income tax on digital services to be paid both residents and non-residents. Such legislative approach is contrary to the interests of such kind of services leading exporters — multinational corporations from the USA and China creating risks of both symmetric and asymmetric international economic and law countermeasures, particularly, within World Trade Organization implementation.

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