TAX MANAGEMENT THROUGH TAX HAVENS COUNTRY, TRANSFER PRICING AND PROFIT SHIFTING (With special reference to Indonesia case)
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Date
2011-03-14
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2nd International Conference on Business and Economic Research (2nd ICBER 2011)
Abstract
Although taxes affect numerous aspect of our life’s and influence nearly all business decisions, their impact is
not uncontrollable. Given an understanding of the rules, taxes can be managed with considerable success.
Effective systems of tax management are vital to any profit oriented organization. Successful management,
however, is predicated on good tax management
The obvious goal of most tax management is the efficient amount or reducing the amount of taxes that a person
or other entity must transfer to the government. The legal efficiency of taxes is usually referred to as “tax
avoidance”, while the use of illegal means of reducing taxes referred to as “ tax evasion” (unilateral and
bilateral) and should never be tolerated
Every nation claims the right to tax income originating within its borders. However, national philosophies
regarding the taxation of foreign source earning differ and this is important from a tax management
perspective.
Tax considerations on international operation strongly influence decisions on where to invest, what form of
business organization to employ, how to finance, when and where to recognize elements of revenues and
expense, and what transfer prices to charge. With the possible exception of cost of goods sold, taxation is the
larger expense of most businesses. It makes sense for management to minimize international taxes when ever
possible, through tax havens country, transfer pricing, and profit shifting
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Keywords
tax management, tax havens country, transfer pricing, profit shifting