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Finance - Coggle Diagram
Finance
Tax Considerations
Tax Rates and Multinational Corporations
Cross-border tax rules
Geography
National Boundaries
Technological Changes
Difficulty for governments to collect all the tax receipts they believe they are owed
Changes in international trade structures
Base Erosion and Profit Shifting
Paying Taxes
Hiring accountants
Learning about deductibles
PriceWaterhouseCoopers (PwC) and the World Bank Group collect data
Meeting deadlines
International Tax Rates
Learning about differing tax rates
E.g. Sweden high with tax rates of 53%
E.g. Saudi Arabia low with tax rates of 10%
Transfer Pricing
Ethical issues - is it right to use loopholes to reduce tax rates?
Exchange Rates
Exchange Rate Movements
SMEs usually most affected
High exchange rates can cause cash flow problems
International Capital Flows
Improving technology makes foreign trade easier than ever before
Volatile Exchange Rates
Value of companies’ assets and liabilities in foreign currencies can be affected
The Foreign Exchange Market
Demand for pounds from abroad
organisations who want to change their currency into pounds to buy UK goods and services
the more expensive the price of a pound, the more foreign currency has to be changed to buy it
Supply of pounds to the foreign currency market
depends on the desire of individuals and organisations to change their pounds into foreign currency
if the value of the pound increases, this means that the pound has more purchasing power abroad
Reaching equilibrium in the currency markets
in a free market, the price of the currency will adjust until the quantity supplied equals the quantity demanded
International Financial Reporting
Accounting regulation
evolved in response to economic evolution
Jurisdictions
Why jurisdictions have different rules
contingent model of accounting change:
Sate of equilibrium
financial scandal/significant economic change
search for consensus as to how to remedy the problem
new regulation
state of equilibrium
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means of regulation
cultural issues
population growth
health & welfare
education
underlying legal system
common law model
Roman law model
Objectives of financial reporting
Not all regulators have an overt set of objectives, and even when they do, there are factors that come into play
events
war
climate change
technological growth
IFRS Standards
gradually being adopted by organisations in place of national accounting standards
Financial flows in a globalised world
The Balance Of Payments
The Financial Account
The Capital Account
The Current Account
Foreign Direct Investments
Securing Operational Control
Long-term capital inflows