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Global Finance, Transfer pricing, Optimal time to buy $ and sell to EUR,…
Global Finance
Economic and financial flows
Global Imbalances
Inequality
Balance of payments
Tracking in/outflows
Portfolio Investments
Shares
Foreign direct investment
Developing roads
Building factories
Import/export payments
Money transfers
Surplus countries saving more/ spending less
Spend more so deficit countries can catch up
Reduce deficit slowly
= Financial Shocks
Reduce too fast
= Demand slumps
= deficit countries also having to save and spend less
= Lower demand
= Less investment
International tax rates
Different rates within different jurisdictions
Cross-border rules complicate tax collection
Co-operation needed
Guarding one's ability to adjust taxes
Schemes shifting profits across borders
Tax avoidance
Foreign exchange markets
Example: Strong pound (£) compared to $ USD
Costs more to buy £
Reducing demand
Expensive exports
Less to buy a foreign currency
Increases purchasing power
Cheaper imports
Example: Weak pound (£) compared EUR
More to buy foreign currency
Decreases purchasing power
Expensive Imports
Less needed to buy £
Increases demand
Cheaper exports
Global accounting standards: IFRS
Comparability
Transparency
Quality
Facilitates businesses
Increases credibility
Investment opportunities
Access to credit
Simplifies multinationals reporting
International reporting
Change
Economical
Reporting effective while in equilibrium
Financial scandal evokes change
The contingent model
Political
War
Joining the European Union
Improved reporting evolution
Imperialism
Economical development
Colonisation
Transfer pricing
Multinational countries inter-trading
Unitary taxation with profit apportionment
mispricing
Shifting profit
Arms length principle
Genuine negotiation
Acceptable for tax
Optimal time to buy $ and sell to EUR
Currency instability may need government intervention
Tax Havens