Cash Cow, Inc.'s CEO wants to open a plant in China in order to
manufacture and sell its tie-died t-shirts directly to the millions of
Chinese who no longer have to dress in black. The company has
$1,000,000 set aside to invest in this project. The Chinese
government has promised a very attractive tax rate. It does, however,
require that Chinese nationals own at least 51% of any entity doing
business in their country. The board of directors is not convinced
that the company should risk capital in such an unstable market and in
an entity in which they do not have ultimate control. Furthermore,
they do not understand why the CEO is so excited about the low tax
rate. The U. S. is going to tax Cash Cow on its worldwide income, so
how does the company save any taxes by going to China? The CEO is
convinced that the potential return is worth the risk and she wants
you to come talk to the board and tell them how the company will be
able to save money. What are the key points you will address? |