International Management What is the global impact on recent

(International Management) What is the global impact on recent consideration of potential tax penalties for production relocation?

Solution

Answer:-

The recent consideration of the potential tax penalties will have a global impact on production relocation in the following ways:-

It will minimize international business among countries- Many countries interact and do business because of the favorable tax obligations that favor them(Lee, 2015). However, these potential tax penalties are threatening to minimize international business, and this means that there will be minimal international activity in businesses.

It will lead to loss of jobs:- International companies and firms will struggle in operating under these tax penalties. This would in turn mean that they will be forced to lay off some employees in seeking more sustainability.

Minimize investments:- When taxes are at a low level, there are many opportunities to invest, even inside the companies and firms. However, these penalties will ensure that these investments will be minimized.

Reduction of consumption expenditure.Since the ability to work will be curtailed, this means that the consumption expenditure will be minimized, meaning that standards of living will go down.

Reference:-

Lee, K. (2015). Timing of Penalties, Tax Rates, and Tax Evasion. Finanzarchiv: Public Finance Analysis, 71(1), 37-52. http://dx.doi.org/10.1628/001522115x14180276055699