The Benefits of Recognizing Prior Informal and Income Taxation and Tax Optimization in Transnational Corporations

Jan Rymarczyk

Published : 2017-02-28

Vol. 72 No. 1 (2017)

The Benefits of Recognizing Prior Informal and Income Taxation and Tax Optimization in Transnational Corporations

Jan Rymarczyk

Abstract

One of the basic aims of the transnational corporation's (TC) financial activity is maximization of profits after tax, that is minimization of taxes. Because profits after tax in particular countries vary, then tax optimization poses a challenge. If the TC runs its activity in the form of a "permanent establishment" or a subsidiary, they are subject to two different tax systems, i.e. that of the host country and home country. Bilateral agreements on double tax avoidance enable tax payments only in one country. Avoidance of double tax remittances can take place in the form of tax credit, i.e. deduction from home tax, the tax paid abroad or in the form of exclusion, i.e. exemption of foreign income from home-country tax.(original abstract)

Keywords:

International corporation, Tax neutrality, Income tax, Value Added Tax (VAT), Tax optimization

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Rymarczyk, J. (2017). The Benefits of Recognizing Prior Informal and Income Taxation and Tax Optimization in Transnational Corporations. Zeszyty Naukowe Wyższej Szkoły Bankowej W Poznaniu, 72(1). Retrieved from https://journals.wsb.poznan.pl/index.php/znwsb/article/view/854

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