Tax-Haven Subsidiaries Are Typically Established in a Country That Can

question 62

Multiple Choice

Tax-haven subsidiaries are typically established in a country that can meet the following requirements:

• A) a low tax on foreign investment or sales income earned by resident corporations and a low dividend withholding tax on dividends paid to the parent firm.
• B) the facilities to support financial services, for example, good communications, professional qualified office workers, and reputable banking services.
• C) a stable government that encourages the establishment of foreign-owned financial and service facilities within its borders.
• D) all of the above

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Definitions:

Interest-bearing Note

A debt instrument that requires the issuer to pay the lender interest over the life of the note, in addition to repaying the principal amount at maturity.

Maturity Value

The total amount due to the owner of an investment at the end of its term, including principal and interest.

Notes Receivable

A claim against a debtor for an uncollected amount, typically evidenced by a formal instrument of credit.

Face Value

The nominal value printed on a bond, note, or other financial instrument, representing its value at maturity.