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The economies of Central and South America offer attractive business opportunities However these are accompanied by a set of risks which businesses need to understand and manage effectively In this paper we will discuss a business risk analysis of MBS Inc in the Venezuelan market Taxation and Double Taxation Risks The accounting standards adopted by The Republic of Venezuela coincide with International Accounting Standards USDT 2004 MBS Incs own financial statements will have to adhere to International Accounting Standards to avoid double taxation The Republic of Venezuela foreign investment legislation provides general assurances on the rights of foreign investors to remit profits and dividends from their investments in the Republic of Venezuela ANDEAN Community 2004 However in some cases these rights are subject to currency tax and export restrictions and no guarantee can be given that all profits will be able to be remitted ANDEAN Community 2004 To aid these restrictions Companies use partnerships in both domestic and international tax-planning structures as a result of the increase in global commerce A number of these tax structures incorporate a multitude of both domestic and foreign partnerships U of F 2004 MBS Inc uses the same strategies By opening subsidiary companies in Venezuela and Europe modeled after our subsidiaries MBSUSA and MBSUK MBS Inc should be able to successfully maneuver around the double taxation threat Taxation in The Republic of Venezuela Taxable Base Taxable profit is determined based on adjusted gross income reduced by deductible costs and tax depreciation For corporate income tax purposes adjusted gross income means gross income ie a companys world-wide income received accrued during the reporting period either in cash in kind or in intangible form Gross income includes total income from the sale of goods work services fixed assets and gratuitous transfers McGraw-Hill Irwin 2003 Foreign Tax Credit A tax credit system is effective to avoid double taxation of income derived from abroad A credit is allowed for
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