This is a preview of one of the articles in the new KROST Quarterly Manufacturing Issue, titled “Manufacturers with International Operations Should Expect a Tax Bill – Pandemic or Not” by Guest Contributor, Alex Martin.
Governments with pressing needs for revenue will target multinationals. Here’s how to mitigate the risk.
According to the Center for Budget and Policy Priorities, individual income taxes generate approximately 50 percent of US federal government revenue.1 With unemployment rates now above Great Recession levels, individual taxes, along with most other streams of revenue, will fall well short of years past. For manufacturers with international operations, audits of cross-border pricing are a prime opportunity to replace some of the revenue lost to the pandemic.
Question: How will tax authorities target manufacturers?
Answer: Are you paying tax overseas?
With government budgets already stretched, generating additional tax from multinational companies is an attractive option. We expect that subsidiaries of manufacturers will be one of the first targets for closing the budget gap. In essence, manufacturers will be accused of shifting profits through incorrect transfer prices – even if there are no profits. Why… Continue here »
KROST Quarterly is a digital publication that highlights some of the hot topics in the accounting and finance industry. Volume 3, Issue 2 highlights some of the hot topics in manufacturing, including accounting for PPP, transfer pricing, Foreign-Derived Intangible Income (FDII), R&D tax credits, and more.