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1、Chapter 9,International Accounting and Taxation,Key words:,1.levy(V.)/impose:to demand payment of a tax2.taxpayer:the one who pays the tax3.multinational company:the company operating across the border 4.double taxation重复征税5.economic globalization经济全球化,6.branch分公司7.subsidiary/affiliate子公司8.tax prefe
2、rence 税收优惠9.tax avoidance避税 10.bilateral:(an agreement,ect.)made between two sides双边的,11.multilateral多边的12.financial situation财务状况13.tax system税制14.tax jurisdiction 税收管辖权,15.territorial principle：a government only levy taxes on the object of tax coming or existing within its border 属地原则16.personal p
3、rinciple:a government only levy taxes on the income of its citizen and resident属人原则,Background Knowledge,1.The definition of international taxation.It refers to the international influence of taxation and tax coordination(tax distribution)among different countries.,Two basic principles of determing
4、tax jurisdiction:territorial principle personal principle,Background Knowledge,2.Tax consideration influence the decisions of the multinational corporations.,Background Knowledge,3.Types of the international taxes.,tax,direct taxes(cant be shifted)income taxes,indirect taxes(can be shifted)consumpti
5、on taxes,9.2 International Taxation,Learning Objectives:1.Know what is international taxation;2.Know two general principles of taxation;3.Know the types of taxes;,Learning Objectives:,4.Understand how can the taxes influence the multinational companies decisions;5.Have a general idea about how to re
6、duce the tax burdens by assets depreciation and how to avoid tax by transfer pricing;,Learning Objectives:,6.Master key words、phrases and expressions in this section.,9.2.1 Introduction,1.Tax considerations strongly influence decisions on:where to invest;（low-tax countries or areas)what form of busi
7、ness organization to employ(branch and subsidiary);,how to finance(using own funds,borrowing,issuing bonds and stocks);when and where to recognize elements of revenues and expenses;what transfer prices to charge;,2.Characteristics:,1.Taxation is the largest expense of most businesses except cost of
8、goods;2.Management has limited control over tax expenses;3.National tax systems are diverse and complex;(the 15 members of EU;the different rules regarding the taxation of foreign source income),Characteristics:,4.International tax agreements,laws and regulations are constantly changing;5.Changes in
9、 one countrys tax provisions have cmplex and wide-ranging effects in a multinational tax planning system.,9.2.2 Initial Conceptstwo general principles of taxation,1.Tax NeutralityIt means that taxes have no effect(are neutral)on resource allocation decisions.In reality,taxes are seldom neutral.,Init
10、ial Conceptstwo general principles of taxation,2.Tax EquityIt means that taxpayers who are similarly situated should pay the same tax.However,there is much disagreement over how to interpret this concept.,9.2.3 Diversity of National Tax Systems,Note:Exports seldom trigger a tax exposure in the impor
11、ting country;The companies operating abroad subject themself to another countries taxes.,9.2.3.1 Types of Taxes,1.the corporate income tax(25%)Its levied on annual net profit of corporates.A important source of government revenue.Since the mid-1980s,the international trend has been to lower income t
12、ax rates.,Types of Taxes,2.withholding taxesThe taxes imposed by governments on dividend,interest,and royalty payment to foreign investors.These taxes are typically withheld at the source by the paying corporation.,Dutch purchaser,Italian brokerage company,buy bonds,90%interest,Tax collector,10%inte
13、rest,withholding taxes,They are often modified by bilateral tax treaties.,Types of Taxes,3.Value-added taxIts typically imposed on the value added at each stage of prodution or distribution.Applies to total sales less purchase from any intermediate sales unit.,Merchant A,Norwegian wholesaler,Merchan
14、t B,buy,500,000,sell,600,000,Value added tax=100,000tax rate,How to calculate?,In practice:,payable tax amount=output VAT-input VATA B C Dconsumer,10,000,1700,15,000,2550,Tax authority,20,000,3400,1700,850,850,Consumers ultimately bear the cost of the value-added tax.,Types of Taxes,4.border taxesIt
15、s levied on imports by the custom of importing country.Such as customs or import duties.The purpose is to improve the competitiveness of domestic goods price.,Types of Taxes,5.the transfer taxThis tax is imposed on the transfer of items between taxpayers,such as transfers of real estate,shares,or bo
16、nd,land or other property.It can have important effects on business decisions.,9.2.3.2 Tax Burdens,It refers to the tax amount born by taxpayers.affected factors,tax rate,tax base,Two methods of lightening tax burdens,methods,accelerated depreciation,transfer pricing,incentive policy,method of tax a
17、voidance,1.accelerated depreciation,depreciationThe fixed assets lose value over a period of time as they are used.This loss of value is called depreciation.Its expired cost.Depreciation methods,Straight-line fashion,accelerated depreciation,Straight-line fashionAn equal portion of assets cost is co
18、mmenly expensed each reporting period.For example:acquisition cost:$4500 expected life:4years net residual value:500$yearly depreciation charge=(4500$-500$)/4=1000$/per year,accelerated depreciation methodWithin the set period,accrue more depreciation charge in earlier stage,but less in later stage
19、to recover the fixed assets beforehand.Advantages:Postpone paying taxes;Be beneficial for fixed assets renovation;Take into consideration the invisible loss of value;,2.Transfer pricing,Transfer price,the price at which an item is transferred internally between two units of the same company.For exam
20、ple:goods or services from a parent company may be sold to a foreign subsidiary.Its usually used for international tax avoidance.,1.accelerated depreciation,depreciationThe fixed assets lose value over a period of time as they are used.This loss of value is called depreciation.Its expired cost.Depre
21、ciation methods,Straight-line fashion,accelerated depreciation,Ahigh-tax countryBlow-tax country(operate in A)(operate in B),parent company,subsidiary,Sell at low price,Buy at high price,1.accelerated depreciation,depreciationThe fixed assets lose value over a period of time as they are used.This loss of value is called depreciation.Its expired cost.Depreciation methods,Straight-line fashion,accelerated depreciation,
