Case Details
Expansion Into the European Market Through China-based Investment: Business Operations and International Tax Planning Strategies
There are growing numbers of multinational corporations that would wish to invest in China and enter the Asian markets. There are also increasing number of Chinese enterprises expanding to the western markets. Hong Kong is a location commonly used for these inbound and outbound investments. International tax planning involving investments into the Chinese Mainland of the People’s Republic of China (PRC), and using Hong Kong Administrative Region of the PRC (Hong Kong) as a platform are important topics in the business world. The author of this case has been teaching international tax planning courses with China focus, and this case is developed to facilitate teaching and learning in classes. This hypothetical case involves real-life practical considerations and strategies on business operations and international tax planning. Students are encouraged to apply their knowledge acquired from classes, and to perform analysis with critical thinking to make possible recommendations for the business expansion plan of the multinational corporation (MNC) group in this case. The case does not only involve international tax planning strategies to minimize global tax liabilities, but also integrate the knowledge that students attained from various business courses, like management, marketing and business strategy, when making suggestions to facilitate business operations and management decisions.
Learning Objective:
- integrate various business knowledge (e.g. management, marketing and business strategy) and apply other tax factors (e.g. tax incentives) in formulating an international business operations plan
- recognize that an appropriate holding structure in a MNC group can facilitate smooth business operations and effective international tax planning, and to recommend possible holding structure alternatives for the business operations plan
- suggest the appropriate investment forms of the new set-ups in relevant jurisdictions, through understanding the advantages and disadvantages of different forms of investments, like subsidiaries and branches
- apply the knowledge of international tax planning strategies, like transfer pricing and tax treaties, to minimize global tax liabilities to maximize profits for the whole corporate group