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Essay / Research Paper Abstract
A 4 page paper discussing the advantages and disadvantages of foreign operations in both a tax- and non-tax-related perspective. Kaplan Enterprises Inc. is a U.S. corporation seeking to expand its business overseas, and it has selected a host country “that imposes a 20 percent tax on corporate income earned within its borders.” The paper discusses the issue from the perspective of the controlled foreign corporation (CFC). Bibliography lists 3 sources.
Page Count:
4 pages (~225 words per page)
File: CC6_KSintlBzExpand.rtf
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Unformatted sample text from the term paper:
a U.S. corporation seeking to expand its business overseas, and it has selected a host country "that imposes a 20 percent tax on corporate income earned within its borders."
Kaplan expects the expansion unit to operate at a loss for three years, after which Kaplan expects the new unit to be quite profitable. a. Discuss tax and nontax advantages and
disadvantages if Kaplan decides to operate the foreign business either as a (1) subsidiary of a US corporation or (2) as a separate corporation controlled by the laws of the
host country. Subsidiary As a subsidiary of a US corporation, the portion of the company operating in a host country still will be
accountable according to the laws of the host country. Depending on what the host country is, the subsidiary may be allowed to pay little if any tax on revenues
generated in the host country. That would be a point of negotiations prior to entering the country for the purpose of establishing a business there. In an area
of high unemployment and low wages, a new subsidiary possibly could gain tax relief in exchange for bringing jobs to the country and positively contributing to the local economy.
Most likely, the subsidiary either will transfer all of its non-operating income to the US parent or will retain all or part of it
to fund future expansion. In either case and in any other in which the operating profit of one company is paid to another generates tax implications for the receiving
company. Separate Corporation Nutter (2001) explains that foreign direct investment (FDI) in other countries by US organizations can take several forms, such as
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