Jap Japan Country Analysis

The basic message of source one is that all persons must follow the given laws or face the full burden of the consequences. Source two’s message establishes the expectations for a wide variety of life - including morality, relationships, building, uprisings, mandatory visits to Edo, clothing, finances, and transportation. The overall message is to establish a firm society while removing the risks of rebellion or chaos.

The role of multinational companies (MNEs) in international trade has become very great importance in the last 20 years. This is in large part to the increase in the integration of national economies and technological progress, in particular in the area of communication. The growing importance of MNEs develop complex issue of taxation on both the tax administration as well as MNEs, since the regulations of each country in the taxation of MNEs can be considered in isolation, but should be considered in the wider international importance (Grimwade, 2000).

Business taxes can have a huge impact on the profitability of businesses and the amount of business investment. Taxation is a very important factor in the financial investment decision-making process because a lower tax burden allows the company to lower prices or generate higher revenue, which can then be paid out in wages, salaries and/or dividends. Business taxes include, Federal Income Tax; a tax levied by a national government on annual income, Payroll Tax; a tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee, Unemployment Tax; a federal tax that is allocated to unemployment agencies to fund unemployment assistance for laid-off workers, and Sales Tax; a tax imposed by the government at the point of sale on retail goods and services. Sales tax is based on a percentage of the selling prices of the goods and services. Consumers pay sales taxes, but effectively, business pay them since the tax increases consumer’s costs and causes them to buy less.

However, the companies only have to pay the U.S. tax for foreign revenues once they bring the profits back to the United States. As a result of these current tax laws, U.S. companies that seek to avoid high corporate tax rates hold their foreign earned profits overseas. “It just makes no sense to pay a substantial tax on it,” said Joseph Kennedy, a senior fellow at the Information Technology and Innovation Foundation (Rubin, R.). It is far too easy for an IT corporation to create a patent in a foreign country and direct revenue to a corporation within that country, thus avoiding the much higher U.S. tax rates. According to Joint Committee on Taxation estimates, the lost revenue is increasing over time as corporations find even more creative ways to make their U.S. profits look like offshore income (Richards, K., & Craig, J.). As result, multinational American corporations have as much as $2 trillion held in overseas subsidiaries and if brought into the United States with the current tax laws, the federal government could benefit by nearly $50 billion per year.

The main objective of many companies is to minimize their tax obligations. Jeffers (2014) discussed the reason of why companies adopt tax inversion strategies. The researcher indicated that the income maximization is a major reason of companies attempting to reduce their tax liability (pp. 100-101). Tax inversion strategies provide companies an advantage to lower income tax rate. Today, U.S. corporations renounce its U.S. citizenship and move to low-tax countries. Companies that reincorporate oversees are not obligated to pay U.S. taxes on earning income (p. 99). Many countries implement tax competition strategies to attract and retain businesses. Well-known companies, such as Exxon Mobil, Hewlett Packard, Tyco, General Electric, PepsiCo, etc. take benefits of tax shelter opportunities overseas (p. 102). Other benefits of the jurisdiction abroad are flexible banking laws and simplified litigation processes.

➢ Taxation – firms functioning when dealing with a different country the subject to that country’s laws and regulations.

The average developed country taxes revenue compared to their gross domestic product are 34% and Japan gets 32% of GDP as their tax revenue. This is better for people in Japan compared to other countries with higher share of tax revenue to GDP such as Denmark and France. However, Japan still have a higher tax rate compared to the United States which have a 26% tax revenue compared to GDP. The tax rate of goods and services also follows that trend, in Japan the average goods and service tax is 19.8% while in the

Government background: The government of Japan is a constitutional monarchy. This means that the power of the Emperor is limited and is relegated primarily to ceremonial duties. In many other states in Japan, the government is divided into three branches the Executive branch, the Legislative branch, and the Judicial branch, which was established in the Constitution of Japan. The Constitution defines the government to be in a unitary form of a parliamentary system.

Japan has various bilateral and multilateral trade agreements. This month, Japan and India have just jointly agreed to strength their military and economic ties (Reuters,2014). The Japan’s economy has actually opened up after World War Two with the removal of trade barriers and the signing of agreements promoting ‘freer and fairer’ trade (Duss,1998). Referred as a homogeneous society with its racially unified group of people (Burgess,2014), the openness of the economy today may make it hard for Japan to stay homogeneous. Increase in interactions, integrations within economies and transfer of ideas may lead to creation of new business ethics and ideas which may ‘force’ Japan’s firms to come up with new approach such as working more with people from other countries (Karan,2005). This may result in increased presence of immigrants in Japan. However, the economic mobility in Japan today is still not very

Unlike United States, Japanese business is mainly regulated by governmental system. The involvement of the Japanese government, Japan’s Ministry of Economy, Trade and Industrial (METI), plays essential roles of the trade regulations such as standards, bans and restriction and policy making in Japan. Japan is disreputable for maintains complex technical regulation on products that has overly strict strands on importing goods and services. For example, many imported goods are tested and not allow to be sold without certification of standards

The key point of this research paper is to illustrate that taxes are a major drivers that push MNC to relocate abroad. I will consult various literature to explain and illustrate my research question. Subsequently I’m going to use the tax home relocation case of FIAT to demonstrate what is happening nowadays to many Multinational Companies all over the world.

Even though there is a large amount to be achieved in the course of overseas market expansion, a usual consequence of such expansion is amplified risk. One of the key risks that might destructively affect the accomplishment of a company’s expansion is tax risk. Luckily, there are a ways of long term tax planning prospects that a U.S. business owner can think about executing at a variety of stages of worldwide expansion that can help generate long-lasting efficient tax rate reimbursement that possibly will enhance the company’s after-tax stance. In order to attain this, though, business owners ought to be aware of a variety of types of U.S. taxes along with overseas tax coverage that can occur in the international circumstance. (Goodspeed, 2003)

Apart from a low corporate tax rate – which on it’s own does not imply the label “tax haven” – country has to be well-governed, which includes an efficient and respected government, political stability, rule of law, and the control of corruption. Small islands with a population below 1 million are also highly favorable jurisdictions because they often lack natural resources and hence depend on foreign investors. MNEs such as Google, Apple, Amazon and Starbucks have long ago discovered the advantages of such small island economies. Yet, this paper also shows that tax haven do not have to be located in some remote islands with sandy beaches – but they can also be in any respectable country of the European Union. Many successful MNEs, for example, use financial regulatory loopholes in Ireland, Luxembourg or the Netherlands to avoid paying their fair share of

Tax cuts for foreign investors are not very influential in factors for selecting investment locations. It is not to say that tax incentives have no effect on foreign investment and can sometimes be the critical thing that brings foreign investment, after the consideration of things such as basic

Nowadays, Transfer Pricing has been the most issue in International Taxation area. The activity of Multinational Enterprises (MNEs) which represents a growing proportion of international trade may significantly lead to Transfer Pricing practice, in particular within intra-group transaction where income can be shifted from high-tax jurisdiction to low-tax jurisdiction. Therefore, it is no doubt that such behavior may lead to tax base erosion.