Question

The government of Bicana recently passed a law requiring every foreign country operating in Bicana to pay 50% of its earnings in taxes. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of _____ faced by companies that want to conduct business in Bicana.

Answer 1

Answer:

policy uncertainty

Explanation:

The government of Bicana recently passed a law requiring every foreign country operating in Bicana to pay 50% of its earnings in taxes. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of policy uncertainty faced by companies that want to conduct business in Bicana.  The future path/policies of government are uncertain and this poses a major risk in the running of businesses. A government could pass a policy that is favourable to the operation of a business today or pass another in a few years time which may be less favourable. To reduce this risk in businesses, multinational corporations and huge businesses attempt to influence government policies by lobbying or supporting individuals campaigning for political positions.