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Int finance ppt
- 2. MEANING It refers to tax levied on the cross border transaction. Transaction may take place between two or more persons or entity in two or more countries or tax jurisdiction. Such transactions may involve a person in one country with property and income flows in another.
- 3. BASES OF INTERNATIONAL TAX SYSTEM It is expected that the international tax system should be neutral that means it should not affect economic efficiency. A firm should not be taxed twice for the same income so these three concepts came up:- Tax Neutrality Tax Equity Avoidance of Double taxation
- 4. TYPES OF TAXES Income tax With-holding tax Value- added tax
- 5. TYPES OF INTERNATIONAL TAXATION Residence based taxation Source based taxation
- 6. INTERNATIONAL TAX MANAGEMENT STRATEGY Firms need to decide whether the profits should be with subsidiaries or to repatriate within the home unit If it stays with the subsidiaries, the profit would be reinvested in profitable channels Following above would hamper the purpose of investment in subsidiary Tax burden would be reduced if the firm allocates more cost in high tax country and shows greater profits in low tax countries Transfer pricing in a possible and limited way could reduce the above OECD does country by country reporting under its action plan
- 7. TAX HAVENS COUNTRIES A tax haven country is one that that has zero rate or a very low rate of income tax and with holding tax.
- 9. Classification in groups GROUP 1 GROUP 2 GROUP 3 GROUP 4 Bahamas British Virgin islands Costa Rica The Netherlands Bermuda The Netherlands Antilles Hong Kong Luxembourg The Cayman Islands Montserrat Panama Switzerland Nauru Gersey Liberia Liechtenstein New Hebrides The Isle of Man Gibraltr Turks Guernsey Barbados Caicos Islands Grenada
- 10. Bermuda – Personal Income Tax Rate 0% – GDP per capita of $91,479. Qatar – Personal Income Tax Rate 0% – GDP per capita of $60,796. The Cayman Islands – Personal Income Tax Rate 0% – GDP per capita of $54,827. Kuwait – Personal Income Tax Rate 0% – GDP per capita of $30,147. United Arab Emirates – Personal Income Tax Rate 0% – GDP per capita of $25,773. Brunei – Personal Income Tax Rate 0% – GDP per capita of $25,140. Bahamas – Personal Income Tax Rate 0% – GDP per capita of $20,690. Bahrain – Personal Income Tax Rate 0% – GDP per capita of $18,128. Saudi Arabia – Personal Income Tax Rate 0% – GDP per capita of $17,820. Oman – Personal Income Tax Rate 0% – GDP per capita of $12,472.
- 11. DOUBLE TAXATION Domestic double taxation arises when comparable taxes are imposed within a federal state by sovereign tax jurisdictions of equal rank. International double taxation arises when comparable taxes are imposed in two or more states on the same taxpayer in respect of the same taxable income or capital, e.g. where income is taxable in the source country and in the country of residence of the recipient of such income.
- 12. DOUBLE TAX AVOIDANCE AGREEMENT IN INDIA Mentioned under Section 90 of the Income Tax Act The act gives empowerment on avoidance of double taxation by signing an agreement with foreign government Presently 4 dozen treaties are signed Treaties are either comprehensive or partial If no treaty exists, the Indian resident will get a tax relief under Section 91 of IT act