Currency Denomination of Intercompany Debt and Multinational Taxes
For multinational companies (MNCs) with foreign subsidiaries, the currency denomination of intercompany debt can have important effects on both taxes and financial statements. This paper analyzes the choice between an intercompany loan denominated in the home currency and one denominated in the subsidiary's functional currency. Using U.S. rules for financial accounting and taxes, the author demonstrates the expected impact of the loan's currency denomination on the expected level and variability of an MNCs overall taxes in the case where it has excess foreign tax credits. Copyright Copyright (c) 2009 Morgan Stanley.
Year of publication: |
2009
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Authors: | O'Brien, Thomas J. |
Published in: |
Journal of Applied Corporate Finance. - Morgan Stanley, ISSN 1078-1196. - Vol. 21.2009, 3, p. 86-94
|
Publisher: |
Morgan Stanley |
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