1. TASK: Insert the appropriate word in the text below:
permanent establishment - harsh - split - subsidiaries - partial
Here is a hypothetical problem. A company based in the U.S. owns stations in the nations of Nigeria, Venezuela and China. This company employs a person who is not a U.S. citizen at one of the ________. The worker receives monetary compensation through a ________ U.S. and local payroll. The worker’s income is paid into a bank account in a third country. By this process, the American headquarters is taking a deduction for the employee’s work without recharge of the cost made to the associate subsidiary.
In the above example, the American-based company could have a ________ risk, according to OECD principles. Multiple tax treaties and domestic tax laws have tests to help an employer determine if he or she has a permanent establishment risk. The most common indicator of a risk is the presence of a foreign-employed individual who makes executive decisions for the local business.
In the hypothetical story, there is also the chance that the employee is not exercising compliance with the local tax laws. Using the split payroll structure, any locally-paid compensation is typically subject to ________ withholding for income tax purposes. The employee will most likely not report foreign pay earning to the U.S. company.
In addition, the American company should most likely be withholding taxes on the foreign-earned pay as well American pay. Failure to do so can result in ________ penalties.
2. CHECK YOUR SPEAKING
|
subsidiary |
[səbʹsıdıərı] |
дочернее предприятие |
|
split |
[splıt] |
разделять |
|
permanent establishment |
[ʹpɜ:mənənt] [ıʹstæblıʃmənt] |
постоянное представительство |
|
partial |
[ʹpɑ:ʃ(ə)l] |
частичный |
|
harsh |
[hɑ:ʃ] |
жесткий |
3. SEE CORRECT ANSWER
Here is a hypothetical problem. A company based in the U.S. owns stations in the nations of Nigeria, Venezuela and China. This company employs a person who is not a U.S. citizen at one of the subsidiaries. The worker receives monetary compensation through a split U.S. and local payroll. The worker’s income is paid into a bank account in a third country. By this process, the American headquarters is taking a deduction for the employee’s work without recharge of the cost made to the associate subsidiary.
In the above example, the American-based company could have a permanent establishment risk, according to OECD principles. Multiple tax treaties and domestic tax laws have tests to help an employer determine if he or she has a permanent establishment risk. The most common indicator of a risk is the presence of a foreign-employed individual who makes executive decisions for the local business.
In the hypothetical story, there is also the chance that the employee is not exercising compliance with the local tax laws. Using the split payroll structure, any locally-paid compensation is typically subject to partial withholding for income tax purposes. The employee will most likely not report foreign pay earning to the U.S. company.
In addition, the American company should most likely be withholding taxes on the foreign-earned pay as well American pay. Failure to do so can result in harsh penalties.
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в підручнику “Practical Financial English”
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