Types Of A Business And Investment Owned By Foreign Investors

As previously identified, there are also “non-legal/extra-governmental” political risks which could bring unexpected upheaval to foreign firms. Macro political risks such as the threat of violence, corruption, war or military coup, political instability and terrorism are all direct threats to foreign investors.

Classical theories on the taking of property of foreign citizens by governments were originally developed to protect the interests of European investments abroad.

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.

Expropriation is more likely to occur in non-Western countries that are poor, relatively unstable, and suspicious of foreign multinationals.

If That does not favour the company they will invest. In terms of tax planning, companies may find it difficult to expand due to the tax ramifications. Country X (Foreign Country) may have a high tax burden on companies that choose to expand their operations abroad. Other reasons may include the means of advertisement, the start-up costs, and the political market.

I will first talk about the purpose of having operations done in another country. American companies can decide to move their companies overseas for a few reasons. One reason is that they can hire workers at low wages, for example, in China they can pay as little as 30 cents and hour whereas here they would have to pay employees minimum wage.1 Another reason is because the company would not have to pay employee benefits, such as vacation time sick days, and health insurance.1 A third reason would be that they would not have to follow safety and environmental regulations.1 The last reason would be that they would not have to pay foreign taxes

One example is that China’s one child policy has forced a generations of young adults to be sole providers for older family members, thus giving them less money to spend (Washington Post, 2015). To protect the market shares for domestic organizations, countries such as China, have attacked foreign multinationals. In one year, as many as thirty multinational organizations were placed under investigation. Thus, more and more multinationals are becoming cautious about their international affairs. In 2013, it was said that “at least 3,000 U.S. companies were victims of data theft and network disruptions” and many state-owned enterprises (SOEs) have gotten access to local contracts and markets which are unavailable to foreign firms (Washington Post, 2015). Due to such failures, companies are working to find the best international business model such as reshoring and localization. Therefore, according to the author of this article, “there’s money to be made for multinationals the world over, but they are going to have to rethink their strategies for making it” (Washington Post,

The term ‘corporation’ encompasses a range of corporate structures including subsidiaries, holding companies, and joint ventures. ‘Transnational corporations’ are those corporations (and their related entities) that have operations in more than one state. Such entities are able to operate across national borders, sell products and source labour in multiple markets, and shift production, resources and expertise as and when required. There is no doubt that global firms are engines of prosperity and growth across many areas of the world. Corporations generate valuable employment and educational opportunities, revive living conditions in flagging communities with much-needed investment and new technologies, and enhance the prosperity of those states able to ride the globalization wave.

A lot of American companies have invested large amounts of money in foreign countries in order to obtain lands, natural resources, and cheap labor. With these large sums of money large corporations have indirectly gained a lot of influence in the economy of other countries. Large corporations make a lot of money investing in foreign countries but they also bring jobs and capital to these countries that so desperately need them.

Department of State, 2012). A 1995 law fights against incentives and exonerations through foreign investors (U.S. Department of State, 2012). Its’ legal and political systems protect any foreign company against government expropriations each other with the International Monetary Fund (IMF) (U.S. Department of State, 2012). The authorities in Togo will be open to any kind of business who wants to invest in its country as putting them first than other issues as well as food licenses (U.S. Department of State, 2012).

Suppose a United States investor did not elect to have his or her investment in a Passive foreign Investment Company treated as a Qualified Electing Fund. This seemingly small issue undoubtedly has huge financial consequences for the taxpayer.

Private businesses operate to earn profits and the theoretical basis on which their economic activity rests in the maximization of profit. In the pursuit maximization of profits, multinational corporations (MNCs) often expand their businesses to countries having lower labor cost, comparatively decreased cost of doing

Under customary international law, the home state of a foreign investor cannot espouse the investor’s claim against the host state until the investor has exhausted

The level of internationalisation around the globe has grown throughout the years, with advanced technologies the ease and ability to work with foreign countries has also grown. However, firms do not simply interact with each other with no outside party involvement; the government can be seen to play a large role in conducting international business. Governments continuously have the responsibility to act in the manner that they believe is best for their nation; this includes decisions regarding protectionism, which may serve to aid domestic industries but simultaneously hinder international business. It can be seen that governments do not always act in their nation’s best interest and are corrupt which can serve to increase the risks and costs of entering an international business environment. While these are examples in which the government makes international business difficult it can also be seen that the presence of a government is instrumental in creating international business effectiveness, whether this be through their legal system or from trade agreements. This makes the role the government plays paradoxical; as their involvement generally increases the risks and costs of firms seeking to internationalise, whilst simultaneously playing a significant role in creating international business effectiveness.

This essay is the analysis of one of the biggest foreign investment in Australia in mining sector. In analysing the case, essay explains how the relationship between government and business can be seen in this investment deal. This investment deal has gained much attention in Australia as it may have substantial environmental effects. This investment will have the sole control of a foreign company and will have big environmental effects, so has come under scanner. The first part of the essay explains the overview of the case and second part of the essay discusses the theoretical concepts that can be associated with the case.