Complexity of laws and rules that determine the tax for foreign companies and the profits generated abroad is actually derived from some basic concepts. This concept includes instilah tax neutrality and tax equity. Tax neutrality means that no impact (neutral) to the resource allocation decisions. In other words, business decisions driven by economic fundamentals and exchange rates seoperti rather than tax considerations. Tax equity means that taxpayers face a similar situation should pay the same taxes, but there is disagreement between how to interpret these concepts.
Diversity NATIONAL TAX SYSTEM
A company can conduct international business by exporting goods and services or to make foreign investments, directly or indirectly. Export potential rarely trigger a tax on the State to import, because it difficult for the importing countries to impose taxes imposed on foreign exporters. On the other hand a company oriented in other countries through subsidiaries or affiliated companies taxable in that State.
Oriented companies in foreign countries face various types of taxes. Direct taxes like income tax, it is easy to identify and generally disclosed in the company’s financial statements. Indirect taxes such as consumption taxes can not be identified clearly and not too often expressed, they are generally hidden in postal costs and other burdens.
Corporate Income Tax, may be used more widely to generate revenue for the government compared with other major taxes with the possible exceptions to the excise bead.
Tax levies are taxes imposed by governments on dividends, interest and royalty payments received by foreign investors.
Value added tax is a consumption tax that is found in Europe and Canada. This tax is generally levied on value added of each stage of production or distribution. This tax applies to total sales minus purchases of intermediate sales units.
Border taxes such as customs and import duties are generally aimed at maintaining agara domestic goods can compete with the price of imported goods. Thus the tax imposed on imports is generally carried out in parallel, and other indirect taxes paid by domestic producers of similar goods.
Transfer tax is a type of other indirect taxes. The tax is imposed on transfers (transfer) tax antarpembayar objects and can cause a critical influence on business decisions such as the structure of the acquisition.
USE OF SOURCES OF INCOME OF FOREIGN AFFAIRS AND double taxation
Each country claims the right to impose a tax on profits generated in the region. However, the national philosophy of taxation on resources from abroad is different and this is important from the perspective of a tax planner. Most countries (like Australia, Brazil, China, Czech Republic, Germany, Japan, Mexico, Netherlands, United Kingdom, and United States) to apply the principles throughout the world and a tax on profits or income of the company and citizen in it without seeing the territory. The underlying idea is that the foreign subsidiary of a local company is a local company that happens to operate in foreign countries.
TAX PLANNING DIMENSION
In the tax planning of multinational companies have certain advantages over purely domestic firms because they have greater geographic flexibility in determining the location of production and distribution system. In wearing the source of many foreign tax authorities of tax that focuses on organizational forms of foreign operations. A branch is generally regarded as an extension of the parent company. Thus the returns immediately consolidated with the parent company’s profit and fully taxable in the year when the profit generated, whether sent back to the parent company or not.