Corporate risk management – multinational tax management


Various products are frequently sold in most of the countries by multinational organizations with denomination of prices in subsequent local countries. Extensively it is known that as the instability in exchange rate has become greater than before vividly after the collapse of a system which is called Bretton Woods. This is the system of those exchange rates which are fixed (Chowdhary  and Howe, 1999), multinational corporations might have become more and more susceptible to exchange risk ever since the short term schedule into exchange rates are frequently not attended through the offsetting changes in prices in subsequent countries.  
 
When an organization considers the tax which is gulp by them, it is the society bane to most persons (Anon, 2008). It is illegal, if an organization is not paying the tax intentionally. Avoidance of tax is illegal. Avoiding of higher taxes in a business puts our business in a position of tax optimal situation. This is clear that most persons do not like to pay tax, unless if we are powerful and rich we should pay this. If the organization is rich and powerful as a large corporation there are means to evade paying higher tax rates in several of nations we operate in.    
Through the transfer pricing, several multinational companies are avoiding tax. A company is having a subsidiary in other country. For subsidiary the tax rates are highest than that of company (Anon, 2008). Thus, if benefits are higher where subsidiary is placed than the company would lose more and more by tax. The company is proficient to keep more currency which had been lost by tax. Basically this is extremely cheeky and government do attempt and implement systems to bane the running transfer pricing but it may be hard risk.

Multinational firms are extra manipulative and would do the lot to avoid the tax. In this world every company would be positioned in Bahamas! Another thing is that the infrastructure of this type of companies must take into account. For an example, it might not be possible for business to transfer a tax to a friendly country. Structure and strategy of a business must be taken in account.



Anon (2008), Tax Management multistate tax portfolios, Tax Management Inc

Chowdhary B., Howe J. T. (1999). Corporate Risk Management for Multinational Corporations: Financial and Operational Hedging Policies, European Finance Review, Kluwer Academic Publishers, 2, 229–246