ADVANCED BUSINESS STRATEGY Tax decisions play a big part in a company's strategy. Give specifics regarding...

ADVANCED BUSINESS STRATEGY

Tax decisions play a big part in a company's strategy. Give specifics regarding income tax rates and practices across countries in the major markets of the world. Explain the strategic implications for the company. Does it make sense to do business there? you can organize your response with groupings by geographic areas, such as by country continent.

Expert Solution

Corporate taxes play a major decision before setting up a business unit in any particular country.

Countries like Africa, India, Bangladesh have started the practise of giving tax incentives to companies, that come to their country and set up a business division. This serves as a "win-win" for both parties, as the country gets a boost to its employment, while the firm gets a tax consession, thus boosting profits.

But by just looking at tax rate is not enough, for example before setting up a plant in an African country, I would want to see the productivity and sophistication of the labor, which will be important parameters for the production.

Example: Africa

Africa has given a 10 year tax exemption to a telecom giant (Airtel), to set up business and boost connectivity in Africa. For Airtel, tax was the main consideration before setting up the unit, and a subsidy in taxes perfectly aligned with their strategic objecticves and hence they decided to go ahead with the project

Example : India

India has come up with a concept called as SEZ (Special Economic Zones) - Which basically give a tax break to the companies that are setting up in those areas, lots of companies move to those areas as they get better profits due to reduced tax costs

jeff jeffy answered 2 years ago

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