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Important considerations for multinationals - Coggle Diagram
Important considerations for multinationals
International financial reporting
The International Accounting Standards Board
An organisation that provides specific accounting standards for financial statements
Bringing transparency, accountability and efficiency to financial markets
Economic and financial flows
The balance of payments
Economic indicator that records the transactions between individuals or firms in a country with the rest of the world. (Current account, capital account, financial account)
Crisis
Global crisis 2008
Global imbalances
Imbalance between countries with deficits and surpluses in their current accounts
Imbalance between high public sector and low private sector spending
International taxes
Tax evasion
International tax avoidance
Shifting profits across borders to take advantage of lower tax rates than in the country where they made the profit
Control system
Base Erosion and Profit Shifting
Illegal practice of not paying taxes
Transfer mispricing
Trading between unrelated parties that act as if they are part of the same multinational
Control system
‘Arm’s-length’ principle
Data analysis system
"Paying taxation"
Document that gives an insight into how governments tax companies
Doing business lawfully
Foreign exchange market
Governments role
Increasing the value of its currency
Buying its own currency using foreign currency reserves
Increases the equilibrium price
Increasing interest rates
Attracts investors looking for high returns
Fighting
Exchange rates
Price of one currency in terms of another currency
Affect the value of the liabilities and assets of companies
Multinationals are companies that have operations in at least two
different countries
They are responsible for a large part of the economic and financial flows in the global economic context
They chose:
The currency they keep cash in
Where to record expenses and profits
Where to keep cash