Factors affecting international trade flowsbasiljoe010
International trade flows and direct foreign investment are affected by several factors. Inflation, national income levels, government restrictions, and exchange rates all impact a country's current trade account balance by influencing imports and exports. Capital flows like portfolio investment and direct foreign investment between countries have also increased with globalization and are driven by changes in restrictions, privatization, economic growth potential of countries, tax rates, and currency exchange rate expectations.
Brief PPT on Balance of payment Vs Balance of TradeShubham Parsekar
The ppt is based on Balance of payment and Balance of trade, their meaning ,factors affecting them and difference between both i.e BOP & BOT.
i hope this presentation will be helpful to you , as everything is tried to fit in these slides. i suggest everyone to just go through the economics text book and gain more insights if one is very much interested in it.
please like the presentation and comment below your views about it.
follow me on slideshare for more informative power point presentations.
Import trade involves purchasing goods or services from other countries. There are two types of import trade: direct imports where an individual imports goods for their own use, and indirect imports where middlemen are involved to purchase goods in bulk for resale. Importers need information on procedures, culture, exchange rates, weather, technology and costs from sources like the Tanzania Chamber of Commerce, foreign representatives, trade publications and websites. Intermediaries like import merchants, agents, brokers and distributors facilitate import logistics and documentation. International commercial terms (Incoterms) specify import duties and responsibilities.
This document discusses India's export, import, and foreign trade policies. It begins with definitions of export, import, and related terms. It then describes the types of exports, the roles of governments and private entities in facilitating trade, export and import processes, and methods of financing trade. The document also compares trade policies, outlines India's 2009-2014 Export Import policy and its objectives to double exports and trade share. It provides statistics on India's foreign trade trends in 2012 and describes its balance of trade.
This document provides an overview of customs clearance procedures in India for imports and exports. It outlines the key steps, which include classifying goods, filing necessary documents such as a bill of entry or shipping bill, appraisal and assessment by customs officials, examination of cargo, payment of duties, and release of cargo. Goods are categorized as freely importable/exportable, restricted/licensed, prohibited, or canalized. The process varies slightly based on clearance for home consumption, warehousing, inland container depots, factory stuffing, dock/CFS stuffing, or air cargo but involves similar core steps and documentation requirements.
The document summarizes key initiatives in India's proposed Foreign Trade Policy 2023, including establishing export hubs, promoting e-commerce exports at the district level, streamlining approvals and certification processes, boosting manufacturing sectors like textiles and dairy, and providing incentives to MSME exporters. It also covers plans to develop 50 districts as export hubs through central and state funding, enable partnerships between Indian and foreign post offices to aid cross-border trade, and introduce an amnesty scheme for exporters defaulting on obligations.
This document discusses various barriers to international trade, including tariffs, protectionism, and non-tariff barriers. It outlines arguments for and against protectionism such as protecting domestic industries and jobs. However, tariff barriers can also increase inflation, weaken international relations, and restrict supply sources and consumer choice. The document also examines dumping, the role of the WTO and IMF in facilitating trade, and examples of regional economic communities that promote free trade.
Factors affecting international trade flowsbasiljoe010
International trade flows and direct foreign investment are affected by several factors. Inflation, national income levels, government restrictions, and exchange rates all impact a country's current trade account balance by influencing imports and exports. Capital flows like portfolio investment and direct foreign investment between countries have also increased with globalization and are driven by changes in restrictions, privatization, economic growth potential of countries, tax rates, and currency exchange rate expectations.
Brief PPT on Balance of payment Vs Balance of TradeShubham Parsekar
The ppt is based on Balance of payment and Balance of trade, their meaning ,factors affecting them and difference between both i.e BOP & BOT.
i hope this presentation will be helpful to you , as everything is tried to fit in these slides. i suggest everyone to just go through the economics text book and gain more insights if one is very much interested in it.
please like the presentation and comment below your views about it.
follow me on slideshare for more informative power point presentations.
Import trade involves purchasing goods or services from other countries. There are two types of import trade: direct imports where an individual imports goods for their own use, and indirect imports where middlemen are involved to purchase goods in bulk for resale. Importers need information on procedures, culture, exchange rates, weather, technology and costs from sources like the Tanzania Chamber of Commerce, foreign representatives, trade publications and websites. Intermediaries like import merchants, agents, brokers and distributors facilitate import logistics and documentation. International commercial terms (Incoterms) specify import duties and responsibilities.
This document discusses India's export, import, and foreign trade policies. It begins with definitions of export, import, and related terms. It then describes the types of exports, the roles of governments and private entities in facilitating trade, export and import processes, and methods of financing trade. The document also compares trade policies, outlines India's 2009-2014 Export Import policy and its objectives to double exports and trade share. It provides statistics on India's foreign trade trends in 2012 and describes its balance of trade.
This document provides an overview of customs clearance procedures in India for imports and exports. It outlines the key steps, which include classifying goods, filing necessary documents such as a bill of entry or shipping bill, appraisal and assessment by customs officials, examination of cargo, payment of duties, and release of cargo. Goods are categorized as freely importable/exportable, restricted/licensed, prohibited, or canalized. The process varies slightly based on clearance for home consumption, warehousing, inland container depots, factory stuffing, dock/CFS stuffing, or air cargo but involves similar core steps and documentation requirements.
The document summarizes key initiatives in India's proposed Foreign Trade Policy 2023, including establishing export hubs, promoting e-commerce exports at the district level, streamlining approvals and certification processes, boosting manufacturing sectors like textiles and dairy, and providing incentives to MSME exporters. It also covers plans to develop 50 districts as export hubs through central and state funding, enable partnerships between Indian and foreign post offices to aid cross-border trade, and introduce an amnesty scheme for exporters defaulting on obligations.
This document discusses various barriers to international trade, including tariffs, protectionism, and non-tariff barriers. It outlines arguments for and against protectionism such as protecting domestic industries and jobs. However, tariff barriers can also increase inflation, weaken international relations, and restrict supply sources and consumer choice. The document also examines dumping, the role of the WTO and IMF in facilitating trade, and examples of regional economic communities that promote free trade.
This document discusses the balance of payments theory of exchange rates. It argues that the exchange rate is determined by the demand and supply of a country's currency, which is influenced by the balance of payments. A deficit leads to a falling exchange rate as demand exceeds supply, while a surplus increases demand for the home currency and causes an appreciation. The theory uses demand and supply curves to show how the equilibrium exchange rate is reached when quantities demanded and supplied are equal. It has merits in providing an equilibrium analysis, but also criticisms around its assumptions and indeterminacy.
This document provides a summary of Indian customs valuation laws and rules for imports and exports. It discusses key sections and rules related to determining the transaction value of imported and exported goods for customs purposes. Some notable points covered include how transaction value is defined, when related parties are involved, additions to the price paid or payable, and alternate valuation methods if transaction value cannot be determined. It also discusses several relevant case laws that have impacted interpretation of the valuation rules.
The document discusses international trade theory and the benefits of free trade. It covers theories such as absolute advantage, comparative advantage, Heckscher-Ohlin theory, product life cycle theory, new trade theory, and Porter's diamond of competitive advantage. These theories explain patterns of trade between countries and how free trade allows specialization and gains from trade. The document also discusses concepts such as the balance of payments and whether a current account deficit is problematic.
Transfer pricing refers to the prices charged for goods and services transferred between divisions of a multinational company operating across international borders. The objectives of transfer pricing include reducing taxes, managing cash flows, and avoiding conflicts with governments. Common transfer pricing methods are market-based prices, cost-based prices, and negotiated prices. Transfer pricing allows companies to shift profits between countries to minimize taxes but also presents challenges in terms of performance measurement and conflicts with tax authorities.
The document summarizes customs procedures for importing and exporting goods in India. It outlines the key steps which include filing a bill of entry or shipping bill, assessing and paying import duties, examining goods, and clearing them for import or export. Some key points covered are introducing the IEC number requirement, defining bill of entry and shipping bill, explaining duty payment and priority entry, specialized import/export schemes, and amendments procedures.
The document discusses the Purchasing Power Parity (PPP) theory, which states that exchange rates between currencies are determined by their relative purchasing power. It explains that under PPP, exchange rates adjust to changes in inflation so that the same goods cost the same in each country when prices are converted to a common currency. The document outlines the absolute and relative versions of PPP theory and notes some limitations, such as differences in goods baskets between countries. An example is provided to demonstrate how exchange rates adjust proportionally according to changes in domestic and foreign inflation rates under relative PPP.
The document discusses logistics and supply chain management. It notes that logistics has evolved into a major business area and can help reduce product costs, making goods more competitive. An effective supply chain management approach coordinates activities from vendor to customer. The document also highlights some of the logistics challenges for developing countries, such as higher transportation costs. It assesses countries' logistics performance using several indicators related to international shipping efficiency and infrastructure. Overall, the document emphasizes the important role of logistics in enabling global business operations and fueling profitability across supply chains.
This document provides an overview of key export and import documents. It discusses commercial documents needed for export such as export sales contracts, proforma invoices, certificates of origin, bills of lading, and airway bills. It also discusses regulatory documents required for export like shipping bills and export declaration forms. For imports, it outlines important documents like invoices, packing lists, bills of lading, import licenses, and bills of entry that must be submitted to customs. Overall, the document emphasizes the importance of documentation in international trade for legal and commercial purposes.
The document discusses customs duty in India. It defines customs duty and explains that duties are levied on imported and exported goods. The levy and rates are governed by the Customs Act of 1962 and Customs Tariff Act of 1975. Customs duty is intended to raise government revenue and protect domestic industries. Under GST, IGST is charged on imported goods based on value slabs. The document outlines various cases for determining the timing of duty based on if goods are cleared for home consumption or warehousing. It also discusses export duty timing and valuation methods for customs including transaction value, identical/similar goods, deductive value, computed value, and residual method.
The document discusses exchange rate determination and factors that influence exchange rates. It defines exchange rates as the price of one currency in terms of another, and explains that exchange rates are determined by the relative demand and supply of the currencies. Exchange rates can appreciate or depreciate based on relative inflation rates, interest rates, income levels, and expectations between countries, as well as government controls and speculative activities in foreign exchange markets. The document provides examples of how a bank can profit by borrowing one currency at a lower interest rate and lending it at a higher interest rate based on anticipated exchange rate movements.
Peak-load pricing involves charging lower prices for goods and services during off-peak times when demand is lower, in order to encourage consumers to shift some consumption to those off-peak times. This makes more efficient use of production capacity and reduces costs for producers. Examples include phone companies charging less for calls at night and on weekends, and airlines charging higher fares during popular travel seasons. The strategy shifts some demand away from peak times and leads to more efficient capacity utilization.
1) The document outlines the 8-step procedure for importing goods into India, including obtaining an import license, procuring foreign exchange, placing orders, obtaining shipping documents, clearing customs, and making payment.
2) Key steps include obtaining an import license depending on the importer category, applying to exchange banks to release foreign currency, dispatching letters of credit to exporters, collecting shipping documents from exporters, and completing customs formalities and payments.
3) Importers must follow strict regulations set by the government and Reserve Bank of India regarding licenses, foreign exchange, customs, and payments for imported goods.
ECGC is India's export credit insurer that was established in 1957. It provides credit insurance and guarantees to Indian exporters against losses from payment defaults. ECGC offers various policies like specific, standard, and turnover policies that insure exporters against risks like foreign buyer default, political upheaval, and currency fluctuations. It also provides guarantees to banks to enable exporters to obtain better financing terms. To avail of ECGC's services, exporters must submit an application along with documents and pay initial and monthly premiums.
Balance of Payment Disequilibrium and CausesNeema Gladys
1.Balance of Payment
The balance of payment of a country is a systematic accounting record of all economic transactions during a given period of time between the residents of the country and residents of foreign countries.
2.Componets of BOP
Current Account
It includes imports and exports of goods and services and unilateral transfer of goods and services.
Capital Account
Under this are grouped transactions leading to changes in foreign assets and liabilities of the country.
3. Accounting Treatment of Items (Debit and Credit Items)
Any item which gives rise to a sale of foreign exchange (an inflow) is recorded as a credit item (+) in the accounts e.g. export of goods and services
Any item which gives rise to the purchase of foreign exchange (an outflow) is recorded as a debit item (-) in the accounts e.g imports of goods and services.
4. BOP Disequilibrium
BOP is a double entry accounting record, then apart from errors and omissions, it must always balance.
The BOP deficit or surplus indicate imbalance in the BOP.
This imbalance is interpreted as BOP Disequilibrium.
A country’s balance of payments is said to be in disequilibrium when its autonomous receipts (credits) are not equal to its autonomous payments (debits).
5.BOP Deficit
A deficit or an unfavorable balance exists when the value of autonomous debit items exceeds the value of autonomous credit items.
6. BOP Surplus
A surplus or a favourable balance exists when the value of autonomous credit items exceeds the value of autonomous debit items.
The document discusses various considerations for international pricing strategies. It outlines different pricing methods like cost-based pricing, market-based pricing, and competitive pricing. It also discusses factors that affect international pricing such as competition, costs, product differentiation, exchange rates, and economic conditions of importing countries. The document then provides examples of pricing strategies such as using a standard worldwide price, competitive pricing based on market prices, and marginal pricing. It also gives the example of how Tata Nano might be priced if launched in the European market. Finally, it briefly introduces INCOTERMS which are international commercial terms of sale.
This document discusses foreign direct investment (FDI) in India, including what FDI is, reasons for FDI, India's history with FDI, sectors that allow FDI and in what amounts, issues and challenges with FDI in India, recent policy measures to increase FDI, and how FDI relates to India's "Make in India" campaign. It provides statistics on top investing countries in India and sectors that allow FDI from 0-100%. The conclusion states that India must address FDI issues with priority to liberalize policies and attract investment to support growth.
Bba ii cost and management accounting u 2.1 labour costRai University
This document discusses labour cost and various aspects related to it. It defines direct and indirect labour and provides examples. It also discusses measurement and treatment of idle time, overtime, leave with pay and different wage payment systems like time rate and piece rate. Various incentive plans for remuneration like Halsey plan, Rowan plan and Taylor differential piece rate method are also explained briefly. The document thus provides an overview of key concepts around labour cost accounting.
This document discusses export financing provided by Indian banks and institutions. It describes pre-shipment and post-shipment financing for exporters. Pre-shipment financing provides working capital to enable exporters to procure materials and pack goods for export. It is provided for up to 270 days at interest rates linked to the prime lending rate. Post-shipment financing is available after goods are shipped and finances export receivables until proceeds are received, for up to 6 months at concessional rates. The Export-Import Bank of India, commercial banks, and Export Credit Guarantee Corporation provide various export financing options.
1. There are three types of excise control for clearing goods from a factory: physical control, clearance under a compounded levy scheme, and clearance under self-assessment procedure.
2. Physical control strictly supervises manufacturing and clearance, and is only used for cigarettes. Compounded levy schemes set fixed duty rates for small industries. Self-assessment allows manufacturers to clear goods themselves without permission.
3. Goods may be cleared for various purposes like captive consumption, weighment, samples, exports, and warehousing. Daily stock and personal ledger accounts must be maintained for excise duties.
The document discusses India's import-export policy. It provides a brief history of India's exim policies from the pre-1990s to post-1990s. The key aspects covered include objectives of exim policy, export promotion measures like incentives and subsidies, import control regime, and a comparison of trade trends and balances between the two periods. India moved from a highly regulated import regime with focus on import substitution pre-1990s to a liberalized policy post-1990s with the aim of boosting exports and achieving a favorable balance of trade.
This document provides an overview of transfer pricing. It defines transfer pricing as the price at which divisions of a company transact with each other. The document outlines several purposes of transfer pricing, including evaluating division performance and shifting profits between tax jurisdictions. It also discusses transfer pricing methods, influences on companies, disadvantages, and provides an example to illustrate how transfer pricing can benefit a company.
This document discusses transfer pricing and corporate taxation across different countries and jurisdictions. It provides the corporate tax rates of various countries from 2006 to 2013. It also discusses concepts like the arm's length principle, formulary apportionment, and how governments and companies approach transfer pricing and taxation differently. The document argues that governments should focus on the economic benefits companies create through jobs and growth rather than direct corporate tax revenues.
This document discusses the balance of payments theory of exchange rates. It argues that the exchange rate is determined by the demand and supply of a country's currency, which is influenced by the balance of payments. A deficit leads to a falling exchange rate as demand exceeds supply, while a surplus increases demand for the home currency and causes an appreciation. The theory uses demand and supply curves to show how the equilibrium exchange rate is reached when quantities demanded and supplied are equal. It has merits in providing an equilibrium analysis, but also criticisms around its assumptions and indeterminacy.
This document provides a summary of Indian customs valuation laws and rules for imports and exports. It discusses key sections and rules related to determining the transaction value of imported and exported goods for customs purposes. Some notable points covered include how transaction value is defined, when related parties are involved, additions to the price paid or payable, and alternate valuation methods if transaction value cannot be determined. It also discusses several relevant case laws that have impacted interpretation of the valuation rules.
The document discusses international trade theory and the benefits of free trade. It covers theories such as absolute advantage, comparative advantage, Heckscher-Ohlin theory, product life cycle theory, new trade theory, and Porter's diamond of competitive advantage. These theories explain patterns of trade between countries and how free trade allows specialization and gains from trade. The document also discusses concepts such as the balance of payments and whether a current account deficit is problematic.
Transfer pricing refers to the prices charged for goods and services transferred between divisions of a multinational company operating across international borders. The objectives of transfer pricing include reducing taxes, managing cash flows, and avoiding conflicts with governments. Common transfer pricing methods are market-based prices, cost-based prices, and negotiated prices. Transfer pricing allows companies to shift profits between countries to minimize taxes but also presents challenges in terms of performance measurement and conflicts with tax authorities.
The document summarizes customs procedures for importing and exporting goods in India. It outlines the key steps which include filing a bill of entry or shipping bill, assessing and paying import duties, examining goods, and clearing them for import or export. Some key points covered are introducing the IEC number requirement, defining bill of entry and shipping bill, explaining duty payment and priority entry, specialized import/export schemes, and amendments procedures.
The document discusses the Purchasing Power Parity (PPP) theory, which states that exchange rates between currencies are determined by their relative purchasing power. It explains that under PPP, exchange rates adjust to changes in inflation so that the same goods cost the same in each country when prices are converted to a common currency. The document outlines the absolute and relative versions of PPP theory and notes some limitations, such as differences in goods baskets between countries. An example is provided to demonstrate how exchange rates adjust proportionally according to changes in domestic and foreign inflation rates under relative PPP.
The document discusses logistics and supply chain management. It notes that logistics has evolved into a major business area and can help reduce product costs, making goods more competitive. An effective supply chain management approach coordinates activities from vendor to customer. The document also highlights some of the logistics challenges for developing countries, such as higher transportation costs. It assesses countries' logistics performance using several indicators related to international shipping efficiency and infrastructure. Overall, the document emphasizes the important role of logistics in enabling global business operations and fueling profitability across supply chains.
This document provides an overview of key export and import documents. It discusses commercial documents needed for export such as export sales contracts, proforma invoices, certificates of origin, bills of lading, and airway bills. It also discusses regulatory documents required for export like shipping bills and export declaration forms. For imports, it outlines important documents like invoices, packing lists, bills of lading, import licenses, and bills of entry that must be submitted to customs. Overall, the document emphasizes the importance of documentation in international trade for legal and commercial purposes.
The document discusses customs duty in India. It defines customs duty and explains that duties are levied on imported and exported goods. The levy and rates are governed by the Customs Act of 1962 and Customs Tariff Act of 1975. Customs duty is intended to raise government revenue and protect domestic industries. Under GST, IGST is charged on imported goods based on value slabs. The document outlines various cases for determining the timing of duty based on if goods are cleared for home consumption or warehousing. It also discusses export duty timing and valuation methods for customs including transaction value, identical/similar goods, deductive value, computed value, and residual method.
The document discusses exchange rate determination and factors that influence exchange rates. It defines exchange rates as the price of one currency in terms of another, and explains that exchange rates are determined by the relative demand and supply of the currencies. Exchange rates can appreciate or depreciate based on relative inflation rates, interest rates, income levels, and expectations between countries, as well as government controls and speculative activities in foreign exchange markets. The document provides examples of how a bank can profit by borrowing one currency at a lower interest rate and lending it at a higher interest rate based on anticipated exchange rate movements.
Peak-load pricing involves charging lower prices for goods and services during off-peak times when demand is lower, in order to encourage consumers to shift some consumption to those off-peak times. This makes more efficient use of production capacity and reduces costs for producers. Examples include phone companies charging less for calls at night and on weekends, and airlines charging higher fares during popular travel seasons. The strategy shifts some demand away from peak times and leads to more efficient capacity utilization.
1) The document outlines the 8-step procedure for importing goods into India, including obtaining an import license, procuring foreign exchange, placing orders, obtaining shipping documents, clearing customs, and making payment.
2) Key steps include obtaining an import license depending on the importer category, applying to exchange banks to release foreign currency, dispatching letters of credit to exporters, collecting shipping documents from exporters, and completing customs formalities and payments.
3) Importers must follow strict regulations set by the government and Reserve Bank of India regarding licenses, foreign exchange, customs, and payments for imported goods.
ECGC is India's export credit insurer that was established in 1957. It provides credit insurance and guarantees to Indian exporters against losses from payment defaults. ECGC offers various policies like specific, standard, and turnover policies that insure exporters against risks like foreign buyer default, political upheaval, and currency fluctuations. It also provides guarantees to banks to enable exporters to obtain better financing terms. To avail of ECGC's services, exporters must submit an application along with documents and pay initial and monthly premiums.
Balance of Payment Disequilibrium and CausesNeema Gladys
1.Balance of Payment
The balance of payment of a country is a systematic accounting record of all economic transactions during a given period of time between the residents of the country and residents of foreign countries.
2.Componets of BOP
Current Account
It includes imports and exports of goods and services and unilateral transfer of goods and services.
Capital Account
Under this are grouped transactions leading to changes in foreign assets and liabilities of the country.
3. Accounting Treatment of Items (Debit and Credit Items)
Any item which gives rise to a sale of foreign exchange (an inflow) is recorded as a credit item (+) in the accounts e.g. export of goods and services
Any item which gives rise to the purchase of foreign exchange (an outflow) is recorded as a debit item (-) in the accounts e.g imports of goods and services.
4. BOP Disequilibrium
BOP is a double entry accounting record, then apart from errors and omissions, it must always balance.
The BOP deficit or surplus indicate imbalance in the BOP.
This imbalance is interpreted as BOP Disequilibrium.
A country’s balance of payments is said to be in disequilibrium when its autonomous receipts (credits) are not equal to its autonomous payments (debits).
5.BOP Deficit
A deficit or an unfavorable balance exists when the value of autonomous debit items exceeds the value of autonomous credit items.
6. BOP Surplus
A surplus or a favourable balance exists when the value of autonomous credit items exceeds the value of autonomous debit items.
The document discusses various considerations for international pricing strategies. It outlines different pricing methods like cost-based pricing, market-based pricing, and competitive pricing. It also discusses factors that affect international pricing such as competition, costs, product differentiation, exchange rates, and economic conditions of importing countries. The document then provides examples of pricing strategies such as using a standard worldwide price, competitive pricing based on market prices, and marginal pricing. It also gives the example of how Tata Nano might be priced if launched in the European market. Finally, it briefly introduces INCOTERMS which are international commercial terms of sale.
This document discusses foreign direct investment (FDI) in India, including what FDI is, reasons for FDI, India's history with FDI, sectors that allow FDI and in what amounts, issues and challenges with FDI in India, recent policy measures to increase FDI, and how FDI relates to India's "Make in India" campaign. It provides statistics on top investing countries in India and sectors that allow FDI from 0-100%. The conclusion states that India must address FDI issues with priority to liberalize policies and attract investment to support growth.
Bba ii cost and management accounting u 2.1 labour costRai University
This document discusses labour cost and various aspects related to it. It defines direct and indirect labour and provides examples. It also discusses measurement and treatment of idle time, overtime, leave with pay and different wage payment systems like time rate and piece rate. Various incentive plans for remuneration like Halsey plan, Rowan plan and Taylor differential piece rate method are also explained briefly. The document thus provides an overview of key concepts around labour cost accounting.
This document discusses export financing provided by Indian banks and institutions. It describes pre-shipment and post-shipment financing for exporters. Pre-shipment financing provides working capital to enable exporters to procure materials and pack goods for export. It is provided for up to 270 days at interest rates linked to the prime lending rate. Post-shipment financing is available after goods are shipped and finances export receivables until proceeds are received, for up to 6 months at concessional rates. The Export-Import Bank of India, commercial banks, and Export Credit Guarantee Corporation provide various export financing options.
1. There are three types of excise control for clearing goods from a factory: physical control, clearance under a compounded levy scheme, and clearance under self-assessment procedure.
2. Physical control strictly supervises manufacturing and clearance, and is only used for cigarettes. Compounded levy schemes set fixed duty rates for small industries. Self-assessment allows manufacturers to clear goods themselves without permission.
3. Goods may be cleared for various purposes like captive consumption, weighment, samples, exports, and warehousing. Daily stock and personal ledger accounts must be maintained for excise duties.
The document discusses India's import-export policy. It provides a brief history of India's exim policies from the pre-1990s to post-1990s. The key aspects covered include objectives of exim policy, export promotion measures like incentives and subsidies, import control regime, and a comparison of trade trends and balances between the two periods. India moved from a highly regulated import regime with focus on import substitution pre-1990s to a liberalized policy post-1990s with the aim of boosting exports and achieving a favorable balance of trade.
This document provides an overview of transfer pricing. It defines transfer pricing as the price at which divisions of a company transact with each other. The document outlines several purposes of transfer pricing, including evaluating division performance and shifting profits between tax jurisdictions. It also discusses transfer pricing methods, influences on companies, disadvantages, and provides an example to illustrate how transfer pricing can benefit a company.
This document discusses transfer pricing and corporate taxation across different countries and jurisdictions. It provides the corporate tax rates of various countries from 2006 to 2013. It also discusses concepts like the arm's length principle, formulary apportionment, and how governments and companies approach transfer pricing and taxation differently. The document argues that governments should focus on the economic benefits companies create through jobs and growth rather than direct corporate tax revenues.
The document discusses various concepts related to global pricing strategies used by large multinational corporations (MNCs). It explains that MNCs have subsidiaries spread across the globe and transactions between related entities can be substantial, involving trade of raw materials, components, finished goods or services. It then discusses transfer pricing, which refers to the prices charged for transactions between related entities. The document provides an example of how transfer prices can be manipulated for tax purposes and outlines various factors that affect transfer pricing decisions. It also summarizes different transfer pricing methods like market-based, cost-based and negotiated prices. The document concludes with discussions on international tax arbitrage, anti-dumping regulations, price coordination strategies, and the concept of count
International taxation and transfer pricing for transfer pricing ssuser47f0be
This document discusses international taxation and transfer pricing. It provides an overview of key concepts in international taxation such as double taxation, foreign tax credits, and tax treaties. It also discusses transfer pricing regulations and guidelines from the OECD and IRS that require transactions between related parties to be conducted at arm's length prices comparable to third party transactions. The document outlines methods used to determine appropriate transfer prices such as cost-plus and resale price methods.
This document discusses international pricing strategies and considerations. It begins by outlining learning objectives about pricing options in foreign markets, export price determinants, and setting prices abroad. It then examines pricing standardization versus adaptation, factors influencing export prices, and pricing approaches like cost-plus. Specific methods like competitive pricing, market pricing, transfer pricing, and dumping prices are also summarized. The document concludes with steps to set export prices competitively and considerations for currency fluctuations.
Transfer pricing refers to how multinational corporations allocate profits between subsidiaries in different countries. This impacts how much each country can tax the corporation's profits. The arm's length principle states that transfer prices should be what independent companies would charge, preventing corporations from shifting profits to low-tax countries. However, applying this principle is difficult as direct market comparisons are often not available. While alternatives have been proposed, the arm's length principle remains the international standard as it avoids conflicts over splitting profits that could arise under other methods.
This document discusses various tax concepts related to multinational corporations (MNCs). It defines tax neutrality as tax provisions that conform to an ideal tax system without favoring certain economic activities. It also discusses tax equity incentives some governments provide for certain projects. It notes the US provides tax equity for solar power projects through tax credits and depreciation policies. It outlines the tax implications of dividend remittance from foreign affiliates to Indian companies. It defines controlled foreign corporations and explains they are commonly used structures for foreign operations, allowing profits to reinvest abroad without domestic tax until repatriated. It compares CFCs to foreign branches and their different tax and liability implications. Finally, it discusses transfer pricing and its role in
Chapter21 International Finance ManagementPiyush Gaur
This document contains questions and answers about international taxation and transfer pricing. It discusses key concepts like tax neutrality, different types of taxes like income tax and VAT, how double taxation can occur if all countries tax worldwide income, and methods used to mitigate double taxation like foreign tax credits. It also covers how the organizational structure of a foreign affiliate as a branch or subsidiary can impact tax liability. Finally, it summarizes how multinational companies may use transfer pricing strategies and ways to potentially repatriate blocked funds from a host country.
Company 1Company #1Income StatementBalance SheetAll numbers in thoLynellBull52
Company 1Company #1Income StatementBalance SheetAll numbers in thousandsAll numbers in thousandsRevenue20182017Period Ending20182017Total Revenue14,134,73212,866,757Current AssetsCost of Revenue9,510,2388,668,505Cash And Cash Equivalents1,290,2941,111,599Gross Profit4,624,4944,198,252Short Term Investments512-Operating ExpensesNet Receivables87,86875,154Selling General and Administrative2,576,0982,395,608Inventory1,641,7351,512,886Total Operating Expenses12,086,33611,064,113Other Current Assets11,84713,642Operating Income or Loss2,048,3961,802,644Total Current Assets3,151,1572,813,049Income from Continuing OperationsLong Term Investments7121,288Total Other Income/Expenses Net-7,676-16,488Property Plant and Equipment2,382,4642,328,048Earnings Before Interest and Taxes2,048,3961,802,644Other Assets187,718166,966Interest Expense-18,847-19,569Deferred Long Term Asset Charges--Income Before Tax2,040,7201,786,156Total Assets5,722,0515,309,351Income Tax Expense677,967668,502Current LiabilitiesNet Income1,362,7531,117,654Accounts Payable1,059,8441,021,735Short/Current Long Term Debt84,973-Other Current Liabilities9,90224,559Total Current Liabilities1,926,4021,752,506Long Term Debt311,994396,493Other Liabilities434,347412,335Total Liabilities2,672,7432,561,334Stockholders' EquityPreferred Stock--Common Stock3,7963,919Retained Earnings2,071,4001,801,138Treasury Stock-318,252-272,755Capital Surplus1,292,3911,215,806Total Stockholder Equity3,049,3082,748,017Net Tangible Assets3,049,3082,748,017
Company 2Company #2Income StatementBalance SheetAll numbers in thousandsAll numbers in thousandsRevenue20182017Period Ending20182017Total Revenue38,972,93435,864,664Current AssetsCost of Revenue27,831,17725,502,167Cash And Cash Equivalents3,030,2002,758,477Gross Profit11,141,75710,362,497Short Term Investments-506,165Operating ExpensesNet Receivables860,000327,166Selling General and Administrative6,923,5646,375,071Inventory4,579,0004,187,243Total Operating Expenses34,754,74131,877,238Other Current Assets-12,217Operating Income or Loss4,218,1933,987,426Total Current Assets8,469,2008,485,727Income from Continuing OperationsLong Term Investments--Total Other Income/Expenses Net-44,982-130,838Property Plant and Equipment5,255,2005,006,053Earnings Before Interest and Taxes4,218,1933,987,426Goodwill97,600100,069Interest Expense-8,860-64,295Intangible Assets-144,900Income Before Tax4,173,2113,856,588Other Assets504,000321,266Income Tax Expense1,113,4131,248,640Deferred Long Term Asset Charges-6,558Net Income3,059,7982,607,948Total Assets14,326,00014,058,015Current LiabilitiesAccounts Payable2,644,1002,488,373Short/Current Long Term Debt--Other Current Liabilities-1,429,136Total Current Liabilities5,531,3005,125,537Long Term Debt2,233,6002,230,607Other Liabilities1,512,5001,331,645Total Liabilities9,277,4008,909,706Stockholders' EquityPreferred Stock--Common Stock5,048,600628,009Retained Earnings-4,962,159Treasury Stock--441,859Capital Surplus--Other Stockholder Equity--4 ...
The document discusses the new revenue recognition standard under GAAP which provides guidance for recognizing revenue from contracts with customers. The new standard aims to clarify and converge revenue recognition principles globally to reduce inconsistencies in practice. It establishes a principle that revenue should be recognized when control of goods or services transfers to a customer in an amount that reflects the consideration to which the entity expects to be entitled.
Multinationals are challenged by changing tax laws, accounting practices, valuation methods and penalties as administrations around the world clamp down on tax avoidance
This document provides a summary of key concepts in US transfer pricing jurisprudence, rules, and documentation requirements relating to tangible goods and services. It was prepared by Professor William Byrnes for an international tax planning conference in 1998. The summary covers topics such as the arm's length standard, comparable uncontrolled transactions, functional analysis, economic risks, documentation requirements, penalties for noncompliance, and advance pricing agreements.
Here are the key points regarding the relationship between tax avoidance and corporate social responsibility/ethical behavior:
- There is an ongoing debate about whether aggressive tax avoidance aligns with corporate social responsibility and ethical business conduct.
- Corporate social responsibility refers to companies taking responsibility for the social and economic impact of their operations on communities. This includes contributing to public welfare.
- Ethical business behavior refers to companies acting in accordance with generally accepted moral and professional standards of conduct.
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Transfer pricing: practical manual for developing countries - Chapter 1 Intro...saiprasadbagrecha
This document provides an introduction to transfer pricing. It explains that transfer pricing refers to the prices set for transactions between associated enterprises within multinational enterprise groups. Setting appropriate transfer prices is important to determine the taxable profits of group entities in different countries. However, determining accurate transfer prices can be complex, especially when valuating intangible assets and services. The document also notes some of the key issues around transfer pricing, such as jurisdictional questions of which country has the right to tax profits and potential double taxation, as well as the motivation of some multinationals to manipulate transfer prices to reduce overall tax bills.
The document discusses revenue, profit maximization, and the relationship between marginal costs and marginal revenues. It defines revenue as income received from normal business activities like sales of goods and services. Profit is the amount remaining after subtracting total costs from total revenue. A firm maximizes profits where marginal revenue equals marginal costs - the point where additional revenue from one more unit of output exactly offsets the additional costs of producing that unit.
Contents
Issues 2
Facts 3
Analysis 4
Conclusions 9
Issues
1. How the company should treat the record of buying materials with different currencies?
2. How the company should treat the record of sales with different currencies?
3. What risk have this company associates with their direct sale in a foreign country with different currency?
4. Why might a company want its stock listed on a stock exchange outside of its home country?
5. Why might a company be interested in investing in an operation in a foreign country (foreign direct investment)?
Facts
Besserbrau AG is a German beer producer headquartered in Ergersheim, Bavaria. The company, which was founded in 1842 by brothers Hans and Franz Besser, is publicly traded, with shares listed on the Frankfurt Stock Exchange. Manufacturing in strict accordance with the almost 500-year-old German Beer Purity Law, Besserbrau uses only four ingredients in making its products: malt, hops, yeast, and water. While the other ingredients are obtained locally, Besserbrau imports hops from a company located in the Czech Republic. Czech hops are considered to be among the world’s finest. Historically, Besserbrau’s products were marketed exclusively in Germany. To take advantage of a potentially enormous market for its products and expand sales, Besserbrau began making sales in the People’s Republic of China three years ago. The company established a wholly owned subsidiary in China (BB Pijio) to handle the distribution of Besserbrau products in that country. In the most recent year, sales to BB Pijio accounted for 20 percent of Besserbrau’s sales, and BB Pijio’s sales to customers in China accounted for 10 per-cent of the Besserbrau Group’s total profit. In fact, sales of Besserbrau products in China have expanded so rapidly and the potential for continued sales growth is so great that the company recently broke ground on the construction of a brewery in Shanghai, China. To finance construction of the new facility, Besserbrau negotiated a listing of its shares on the London Stock Exchange to facilitate an initial public offering of new shares of stock.
Analysis
1- How the company should treat the record of buying materials with different currencies?
The company on this study case use materials from another country and this situation make the company keep certain accounting records that could help them describe this reality.
The company should record the account payable of the hops in Euros if that is possible an the dilemma associated to the exchange in the foreign country currency will be out of the picture but since maybe this could not be the case the company should record the account payable for the value of the invoice at the present currency exchange rates and by the time of the contract payment adjust the journal entry adding the loss or gain in foreign currency exchange.
An important rule of accounting is that your balance sheet and income statement must be reported in your home curre.
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2. A transfer price is the price one sub-unit charges for a product or service
supplied to another sub-unit of the same organization.
Alternate Definitions :
Anthony & Govindrajan – “It’s the value placed on a
transfer of goods and services in transactions in
which at least one of the two parties involved is a
profit center. ”
General Definition :- “It is the amount used in
accounting or any transfer of goods and services
between two responsibility centers in an
organization. ”
Definition :
3. Objectives:
It should provide each Business Unit with relevant information so that Trade-off between
company cost and revenue,
Decision that improve business unit profit will improve company profit so It should induce
Goal Congruence decision,
Measure the economic performance of business unit
Simple to understand, easy to administer
4. There are four approaches to transfer pricing:
A. Market-Based : Market price refers to a price in an intermediate market between independent buyers and
sellers. When there is a competitive external market for the transferred product, market prices work well as transfer
prices. Market-based prices are based on opportunity costs concepts.
B. Cost-Based : When external markets do not exist or are not available to the company or when information
about external market prices is not readily available, companies may decide to use some forms of cost-based transfer
pricing system. Cost-based transfer prices may be in different forms such as variable cost, actual full cost, full cost plus
profit margin, standard full cost.
C. Negotiated : Negotiated prices are generally preferred as a middle solution between market prices and cost-
based prices. Negotiation strategies may be similar to those employed when trading with outside markets. If both
divisions are free to deal either with each other or in the external market, the negotiated price will likely be close to
the external market price. If all of a selling division’s output can not be sold in the external market (that is, a portion
must be sold to the buying division), the negoti-ated price will likely be less than the market price and the total margin
will be shared by the divisions.
D. Administered : Selling division sells the transferred goods at a (i) market or negotiated market price or (ii)
cost plus some profit margin. But the transfer price for the buying division is a cost-based amount (preferably the
variable costs of the selling division). The difference in transfer prices for the two divisions could be accounted for by
special centralised account. This system would preserve cost data for subsequent buyer departments, and would
encourage internal transfers by providing a profit on such transfers for the selling divisions.
5. Describes aspects of intercompany pricing arrangements between related business entities and commonly
applies to intercompany transfer of tangible property, intangible property services and finance transfers.
Intercompany transactions are rapidly increasing to leverage the advantages of Transfer pricing.
Objective’s of TP in views of MNCs :
1.Competitiveness in the international marketplace,
2.Reduction of taxes and tariffs,
3.Management of cash flows,
4. Minimization of foreign exchange risks
5.Avoidance of conflicts with home and host Governments over
tax issues and repatriation of profits,
6.Internal Concerns – goal congruence or subsidiary manager
motivation.
The ParentThe Parent
CorporationCorporation
SubsidiarySubsidiary
BB
Latin AmericaLatin America
SubsidiarySubsidiary
AA
North AmericaNorth America
SubsidiarySubsidiary
CC
AfricaAfrica
$$$$$$ $$$$$$
6. 1) Lowering duty costs by shipping goods into high-
tariff countries at minimal transfer prices so that
duty base and duty are low.
2) Reducing income taxes in high-tax countries by
overpricing goods transferred to units in such
countries; profits are eliminated and shifted to low-
tax countries.
3) Facilitating dividend repatriation when dividend
repatriation is curtailed by government policy by
inflating prices of goods transferred
7. Tax on profits & not on gross income
Unlike individuals who are taxed on gross income, corporations are generally taxed only on their profits.
Thus to minimize taxes, corporations try to find creative ways to lower their paper profits in high-tax countries, and
shift those profits to low-tax countries.
A multinational company establishes a legal entity in a low-tax country. Then, the company can assign the
rights to its intangible assets to the newly formed entity. Now, the company in a high-tax country must
pay royalties for using the intangible assets to the company in the low-tax country.
This is very difficult to assess, since intangible assets can be very difficult to value. In effect, the company
now has a free hand to set an arbitrarily high royalty rate. The company in the high-tax country now can achieve
arbitrarily higher expenses and lower paper profits due to the royalty payment. The income from the royalty
payment goes to the company in the low-tax country. In this way, profits are effectively shifted to low-tax
countries
Intangible Assets
How much should it pay in royalties?
8. The Double Irish
Arm’s Length
The Dutch Sandwich
Unlimited liability company
Deferred Indefinitely
9. The double Irish arrangement is a tax avoidance strategy that some multinational
corporations use to lower their corporate tax liability. The strategy uses payments between
related entities in a corporate structure to shift income from a higher-tax country to a lower-tax
country. It relies on the fact that Irish tax law does not include US transfer pricing rules.
Specifically, Ireland has territorial taxation, and hence does not levy taxes on income booked in
subsidiaries of Irish companies that are outside the state.
The double Irish tax structure was pioneered in the late 1980s by companies such as Apple
Inc In 2010 Ireland passed a law intended to counter such arrangements, though existing
arrangements were exempt and lawyers have said that this change will cause no significant
problems for multinational firms.
10. Income shifting commonly begins when companies like Google sell or license the foreign rights
to intellectual property developed in the U.S. to a subsidiary in a low-tax country. That means
foreign profits based on the technology get attributed to the offshore unit, not the parent.
Under U.S. tax rules, subsidiaries must pay “arm’s length” prices for the rights -- or the amount an
unrelated company would.
Because the payments contribute to taxable income, the parent company has an incentive to
set them as low as possible. Cutting the foreign subsidiary’s expenses effectively shifts profits
overseas.
11. Ireland does not levy withholding tax on certain receipts from European Union member States.
Revenues from sales of the products shipped by the second Irish company (the second in the
double Irish) are first booked by a shell company in the Netherlands, taking advantage of
generous tax laws there. Overcoming the Irish tax system, the remaining profits are transferred directly
to Cayman Islands or Bermuda.
This part of the scheme is referred to as the "Dutch Sandwich".
12. Under Irish rules, ULC are not required to disclose such financial information as income
statements or balance sheets.
Sticking an unlimited company in the group structure has become more common in Ireland,
largely to prevent disclosure.
13. Multinational companies don’t have to pay U.S. income taxes on overseas profits until they
transfer them back home. But in reality, companies just leave their profits in overseas tax havens,
deferring taxes indefinitely.
Not only that, Transfer pricing allows companies to move profits from the U.S. to offshore havens
so they’re counted as overseas earnings.
Some 83 percent of top 100 publicly traded companies had tax-haven units in 2009, according to
the GAO. General Electric, Google, Pfizer, and many other companies use this technique. The
federal government loses an estimated (PDF) $100 billion a year through offshore tax abuses