Taxation and Audit Case Solution & Answer

Taxation and Audit

Taxation Literature Review and Outline


Global taxation is the recommended system for the collection of taxes by the Central International revenue Services (CRIS).Recently in October 2021, a new global deal is finalized by the G-26 leaders while the new global tax deal aims to restrain the MNEs from the tax relaxations.  Furthermore, the global tax deal is recognized by over 137 countries and brokered by Inclusive Formwork (IF) which includes the organization of the Economic Corporation and Development which is referred to (as OECD). The new global deal introduces the minimum corporate tax of 15% on the large Multinational enterprises MNEs the basic objective of the new global taxation system is to curb the MNEs from taking benefits from the international tax regime gaps and this system enables the MNEs to shift the profits from their dominions from which Large Multinational companies generate value to low or no-tax jurisdiction. (Cantos, June 2, 2022)

Literature Review

The new global corporate tax reforms have an influential role in the economic impacts on the Low-Middle Income Countries and the High-Income countries that have strong economic support like the USA, France, Germany, China, etc. However, the new global taxation has a strong impact on International corporate taxation (Wendy Edel berg, June 12, 2022).

Global taxation has challenged various countries and has various impacts on the various countries discuss the impacts of global taxation on the International corporate taxation that indicates due to the introduction of the new taxation system national business profits as a share of GDP have enlarged over the last three periods, U.S. corporate tax income has endured comparatively flat.

On the other hand, the newly introduced tax system cost around $500 Billion per year in the countries with the high comparative intensity of losses taking place in middle-income countries including the under-developing countries that have the least or middle income (LMICs). According to tax research, around 40% of multinational profits are shifted to tax docks annually which indicates a 10% net loss of the global corporate income tax revenue globally. Furthermore, for the Low or Low-Income countries which include Zambia, Chad, Pakistan and Guyana, and other countries the MNEs’ tax avoidance costs more than 5 to 8% of the GDP yearly as compared to the 0.6-1.06% of GDP yearly loss for the HICs which include Germany and France. (van der Hoeven, 2022)

There are over 140 countries that agreed on the new tax reforms which has been finalized in 2022 Over 140 countries agreed on fundamental corporate tax reform in 2021. To measure its effects, we compute asset price changes within minutes of the reform announcements. We construct granular proxies for the reform’s costs regarding companies’ tax burdens and countries’ public finances. Highly exposed companies exhibit significant negative stock returns. The immediate total shareholder value loss ranges from $26 billion to $65 billion. Further, exposed countries experience increases in sovereign debt credit risk. Our documented effects are economically large, persistent, and increase over time. Our findings inform the cost-benefit analysis of the most important international tax reform in history. (Cantos J. , 2022)

Although the global taxation agreement that has been announced by the countries which were elaborate in the conferences at the Organization for Economic Co-Operation and Development (OECD), in October 2021 there was an additional treaty on the framework for the novel rules of tax by over 130 dominions or jurisdictions.(Bray, April 7, 2022)Big companies and corporations will pay more taxes in countries where the customers of the companies are located on the other hand the company needs to pay less tax in the countries where the company’s headquarters, operations, and employees are there. Furthermore, the agreement sets up the approval of a worldwide approximate tax which is up to the range of 15 percent, which may berries taxes on companies utilizing incomes in reduced-tax doom.

This is a critical consequence, assuming that companies’ income taxes be able to be responsible for governments of each country with critical revenue for attaining public policy aims. Furthermore, the rates of the corporate income tax have been reduced for decades due to the complications and the competition of the tax. The developing countries mostly depend upon the revenue of the corporate income tax. (Lassourd, February 10, 2022)…

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