When would tax rate differences among countries be important in determining where to place an investment?

Answer 1

In off-shore investing it's no secret that some countries charge lower corporate revenue taxes then the United States - the differences can be staggering- a typical corporation in the U.S averages 15% to 38% pending the tax planning strategies and volume of sales or type of industry. While in other countries as low as 7% to 1.5% but it's not cheap to invest over seas (fees, licencing and legalities or etc) -in some countries the tax rates is set in other there are variations via continuous negotiations rates but some have a set range of tax rates or may alter under a range time period such as 2yrs or five year terms based off the political terms of that country. Other tax rates one must consider are import and export taxes most are set other too negotiable is another strategy as all aren't allocated equally - you may have a lower revenue tax but exceeding high export tax ration many nations will negotiate low temporary rates for up to 5-10 yrs for import tax for necessary raw resources to generate revenues in manufacturing with conditions for increase say a increase of revenue tax based off increasing operations or expanding sales volumes.

Others require such things as conditional income expansion for example they may negotiate a large corporation that has multiple operations across the globe - to consolidate in there nation generating more jobs meaning lower social costs to that nation and higher employment or personal tax revenues- how this is done is offering corporations set tax discounts, capital tax investment options on various avenues of the corporations operations such as resources that require importing to that nation to be reduces or reduced custom cost and other tax revenue shelter increasing profit margins for a company. Some nations hold status or claims of taxes paid towards that economy there for creating a tax shelter via the U.S. if investing and the gains aren't reported or banked and offered at the end of the contractual period say 30yrs though taken in implements. Some contracts are set that the higher tax rate is paid now but in thirty years the credits are returned back to the corporation and yes they are traded as shares in some nations for collateral as loan or corporate business expansions

The IRS is getting savvy to this hence now seeking full bank disclosures in 2009 sending investigators to Switzerland and etc seeking U.S. account holder information- as there is a tax reduction based on taxes paid in invested nation -- the practice is of these tax contracts or commodity trading of these tax vehicles are legal only in certain nations they pose some risk or if savvy can generate vast sums of money but in most cases are legal only in the nation of origin as not legal in all nations. Very few do trade these commodities cause the nature as tax incentives that may have been negotiated may pose increased valuation for other smaller corporations - the act of these trades is as some one buying a car with excellent credit enabling a lower interest rate and selling the that vehicle to a lower credit rate consumer to take over the payments at a lower rate that the new buyer wouldn't other wise be able to acquire. So, in the end there are rates and then nations with fluctuating rates using taxes incentives for some foreign nations to generate higher GDP/stable economy.

The final is other than payment deferral reporting is deferral options without penalty or finance fees are also negotiated to encourage or increase regional o increase GDP, reduce unemployment numbers and stability to economy. It is used under certain terms such as the need to raise capital for expansion or upgrades that may increase production volume or invest in employing more people. What is taxed vary nation to nation may make the difference to hedge return in investment downturns,reducing profit margins loss and influence stability in negotiating other features such as waivers in or deferrals in taxes permitted without penalties or finance fees. So, it's a matter of one tax rates is very low but other taxes will compensate or can be used as bargaining chips in permitting economic growth for the investments if tax strategists have an arson of vehicles to negotiate various options that permit capital expansion such as selling or loaning or even leasing shares of tax deferrals or contractual lower tax rate discounts for future income resources.

This was a tool used to encourage economic stability into newly emerging markets that may be engaging into a capitalist market economy was seen in limited variety in the eastern block nations during the late 1990's as an investor going into investment one must understand are you investing into markets that are leaving these tax rates and act such as possible variable rate investment with stability set for increased set gains then a balloon of decreased dividend returns due to tax deferrals that either due or must be paid out at a higher variable later on? In most cases these positive deferrals has ballooned an investments actual worth in other decrease it making set for new set negotiations in tax shelters and discounts or the ability to make an investment a great option as discount if it has a viable product and market for return growth in the future for long-term investment.

These actions are seen today in parts of Africa today! A tool used to increase GDP the reason why certain African nations are seeing an increase as most developed economies are seeing recession or depression - as more than lower wages or lower living/expense cost also lower tax rates are actually increasing African markets steps towards economic growth shares. As many venture capitalists, corporations and yes countries like China are are sending more development extracting raw resources or applying production at lower costs with higher gains.