A tax inversion is basically a strategy where domestic firm establishes or buys another company in a country with a lower corporate tax rate. Once this relocation of global headquarters is completed, the newly founded firm can avoid paying the higher tax rate in the formal host country, even it most of its sales and profit are derived in another country.
Published in Chapter:
Offshoring IT
Copyright: © 2018
|Pages: 14
DOI: 10.4018/978-1-5225-2255-3.ch476
Abstract
Offshore outsourcing basically describes the practice of contracting to outside vendors in another country, especially in cases where the client company has no direct ownership. This operational strategy of low-cost, global expansion, and increased capability of vendors in India, China, the Philippines, South Korea, has opened great number of avenues of traditional organizational functions of IT. Such functions as software development, call centers, and accounting are typically offshored. Since the late 1990s, offshore outsourcing has included more sophisticated finance and accounting functions, beyond that of simple data input and transactions. Offshore finance and accounting outsourcing is especially becoming an attractive option for many companies. The obvious benefits are gaining access to scarce and valuable skills, cutting costs, and domestic and global achieving competitiveness. However, there are risks as well. A relatively balanced approach of benefits and risks are discussed in this chapter.