Multinational corporation’s taxation and global approach for taxing continue to grow, especially in developed countries. The provision of public services and infrastructure is an essential factor for economic growth. But in many developing countries, the quantity and quality of public services are low. One explanation for this is that these countries find it much more difficult to raise tax revenue than developed countries. Multinationals firms tend to be more profitable than domestic firms, implying that they should also pay higher taxes. Multinational corporations, however, can also shift income to low-tax jurisdictions more efficiently using a variety of devices. The devices include transfer pricing or excessive levels of debt. Multinational corporation’s taxation and global approach for taxing is a problem that is more severe in developing countries.

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HOW TO CARRY OUT MULTINATIONAL CORPORATION’S TAXATION

Multinational corporation’s taxation and global approach for taxing is a challenging and complex issue. For many years tax policy in the US and UK used variants of the foreign tax credit system. Countries like Germany and France, however, chose to exempt external source income fully or almost entirely from domestic taxation. Multinational firms like Amazon have brought corporate taxation to the international policy agenda. One of the most striking trends in corporate taxation in recent years is exempting foreign-source income from taxation. PwC Worldwide Tax Summaries reveal that out of 37 high-income countries, 19 had an exemption system in 1998. The numbers have since risen to 27 in 2008. From the global approach for taxing, firms should invest where the capital is productive, not where taxes are lowest.

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THE GLOBAL APPROACH FOR TAXING

Multinational corporation’s taxation and global approach for taxing are gaining traction. Multinational corporations use existing rules to avoid paying taxes in countries they do not do much of their business. In New Delhi, multinational companies are gaming the rules of the global economy to minimize their tax liability. The ICRICT) has, as a result, argued for the unitary taxation of multinational firms. Fortunately, there have been some encouraging recent signs that the idea of a unitary tax is gaining traction. The ICRICT advocates introducing a global minimum effective corporate tax rate on MNCs of between 20% and 25%. The move would significantly weaken these firms’ financial incentives to shift recorded profits to low-tax countries. The global approach for taxing could then ensure global tax revenues get allocated among governments according to several factors.

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