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konstantin123 [22]
3 years ago
7

Which of the following statements accurately describe the practice of tax inversion?

Business
1 answer:
NeX [460]3 years ago
3 0

Answer:

A) A company shifts their headquarters to a foreign country.

Explanation:

<em>If a corporation restructure itself to replace the current parent with foreign parent so that the current company becomes a subsidiary of the foreign parent, it is known as tax inversion. </em>

Shifting the company to foreign country  also moves the tax residence to the foreign country. Companies take advantage of the existing loopholes to avoid tax, It is different from tax evasion as in tax evasion the companies wilfully avoids paying taxes.

In US various legislation and regulation have been enacted by the Congress and Obama administration to curb such tax inversion. Inversions can be considered legal as they do not violate the relevant tax rules, but it leads to losses for the government.

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