Foreign Direct Investment
Discuss the impact of corporate taxation on corporate decision-making, particularly investment and transfer pricing decisions
Taxation has a direct correlation to corporate profits and subsequent earnings per share. Taxes are a necessary aspect of the capital markets. In many instances, taxes are needed to maintain the overall economic system in which corporations operate in. Aspects such as national security, infrastructure, social safety nets, and other firms of government initiatives, are financed through taxes. Corporations benefit as they can now operate in a more efficient, credible, and transparent business environment. Taxes however, when excessive can discourage foreign direct investment within particular countries.
Taxes particularly for equity investors, have a profound impact on the overall attractiveness of securities. For one, investors are often taxed twice due to capital gains and dividend income. For instance, investors in equities often receive dividend payments throughout the duration of the year. These payments are often taxed as income for the individual investor. Furthermore, in the event that the investor sales securities within the company, he is also taxed for capital gains. Finally, the investor is also impacted as the company in which he invests in, is also taxed for its own income which indirectly affects the equity investor. In this instance, the equity investor is taxed twice. The first taxation occurs when corporations realize profits. The second taxation is on dividends that are given to investors throughout the year.
These taxation procedure directly impact foreign direct investment in international corporations. First, these taxation procedures discourage investment as equity investors will lose a disproportionate amount of their potential gains in taxes. To compensate for this potential lose of income, investors will demand higher rates of return. Companies must therefore, take on riskier projects to compensate for the higher rates of taxation that equity investors will incur. Further compounding these issue riskier projects, by virtue of their risk, may not obtain the returns that equity investor's demand. This could potentially drive down the price of...
Foreign Direct Investment and the Impact of Terrorism Foreign Direct Investment provides many opportunities for both the expanding company and the host country. The host country receives an influx of business into their economy and the expanding company receives the ability to expand into new and emerging markets. There are many factors that weigh into a decision to expand and invest in another country. Of course, one of the key factors
Foreign Direct Investments in Russia The evolution of FDIs in Russia can be divided into three distinct time periods: 1996-1999, 1999-2002 and 2002-2006. Throughout the first period, foreign direct investments registered a steady growth from 0.65% of the GDP to 1.68%. Throughout the following period, they significantly decreased to 1.00%. Finally, in the third period, direct investments registered increases and by 2006, they would represent nearly 3% in the country's
S. billion in 1998. Reported as the dominant source of inward FDI in China is that of Hong Kong, followed by Japan, the U.S. And Taiwan. Summary and Conclusion This study set out to examine Foreign Direct Investment in China by the multinational enterprise. At present China is a primary source for foreign direct investment due to the favorable laws and regulations governing Foreign Direct Investment in China and the attempt to
However, the development and implementation of the new fiscal regulations could expand throughout numerous years. Lack of incentives and transparency in the privatization process - the current administration is basically blamed for its refusal to privatize large state owned companies and numerous banks. In addition, the government is also accused that when they do indeed agree to the privatization of a bank or company, their procedures and reasons are not
Ongoing research is inclusive of."..mechanical and instrumentations laboratories and test centers." (Ibid) Electronics and Infocomm Technology - founded the Centre for Mechanics of Micro-Systems in 1999 which works in collaboration with the Data Storage Institute as well as other partners in production of sensors, actuators, and miniature micro-systems. Precision Engineering and Nanotechnology - established the Centre for Intelligent Products and Manufacturing Systems which has as its focus research and development of:
For instance, Kirkpatrick, Parker and Zhang (2006) emphasize that, "FDI in infrastructure responds positively to an effective domestic regulatory framework. By implication, where regulatory institutions are weak and vulnerable to 'capture' by the government (or the private sector), foreign investors may be more reluctant to make a major commitment to large scale infrastructure projects in developing countries" (para. 1). A pattern of governmental involvement is apparent in varying degrees
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