Throughout the past century, with our world becoming ever smaller as a result of new-age technology and transportation, it has become increasingly important for companies to expand in the international market. With the United States' capitalist mindset in full swing, companies are becoming bigger than ever before with all eyes set on the next challenge and to outperform the competition. With strong competitors rising from various countries, the different environments of operation are apparent as a result of each country's regulations, tax laws, and reporting requirements. One major discrepancy is that of corporate tax laws and rates. With the United States' use of a worldwide taxation system and one of the highest corporate tax rates in the world, companies incorporated there seem to be at a disadvantage to international competitors. With the objective to avoid the high U.S. tax rates, many companies have adopted tax inversion and transfer pricing strategies in an attempt to level the playing field with competitors based in countries with a lower corporate tax rate.
Fung, L. (2016). Corporate Tax Inversions: The New Business Strategy (Undergraduate honors thesis, University of Redlands). Retrieved from https://inspire.redlands.edu/cas_honors/143