One of the main considerations for multinationals when setting up operations internationally, is how best to structure the group for purposes of tax planning. The tax planning mechanisms have now become a key focus area for the Kenya Revenue Authority KRA when carrying out transfer pricing audits.
Unlike global companies, Local leaders are not constrained by existing products or by preconceived notions about customer needs.
Their business models overcome roadblocks and yield competitive advantages in the process. They turn globalisation to their to advantage deploying the latest technologies by developing or buying them. Many of the homegrown champions find innovative ways to benefit from low-cost labour pools and to overcome shortages of skilled talent.
The domestic dynamos possess management skills and talent that multinational companies often underestimate. A six part strategy for Success - Create customised products or services: The homegrown champions possess a deep understanding of the consumers in their countries, grasp the structures of the raw-materials, components, and finished-goods markets in with a low level of customisation inexpensively.
Multinational corporations often complain about insurmountable problems - structural issues such as a lack of distribution channels, or infrastructural hurdles like limited telecommunications bandwidth. Deploy the latest technologies - New technologies keep operating costs low and enable companies to deliver good-quality products and services that helps them outperform competitors that believe they can satisfy local consumers with older technologies.
Take advantage of low-cost labour, and train staff in- house - Many local champions have their core a business model that taps a pool of low-cost labour instead of relying on automation. They must develop other strategies that local companies cannot easily copy.
The advantages of being a transnational corporation in emerging markets have declined dramatically in recent times.The corporate tax rate in the U.S. runs as high as 35 percent, but companies don't pay U.S.
taxes on profits earned abroad as long as that money remains offshore.
"The loopholes in our tax code. How Local Companies Can Take the Competitive Advantages. If you’re setting out to participate in quickly improving economies, think twice: Smart domestic enterprises are staving off the challenge from international leaders of market.
The big monopolistic corporations [formed in the late nineteenth and early twentieth century] proved to be enormously profitable.
These giant corporations are the basic units of monopoly capitalism in its present stage; their (big) owners and functionaries constitute the leading echelon of the ruling class.
8. AGENTS OF INFLUENCE: MULTINATIONALS, – Few companies have attracted as much opprobrium as multinationals. Long before the emergence of modern joint-stock companies, the Medicis and Rothschilds exuded an air of sinister power and fleet-footed mystery. Feb 28, · The subject of how small can beat big is explored on a transnational scale in How Local Companies Keep Multinationals at Bay in Harvard Business Review, .
By Esther Wahome and Evelyn Muturi The transfer pricing provisions in the Law aims at ensuring local entities that are part of a multinational group (MNE) pay their “fair” share of taxes.