Analysis Of The Interactions Between Multinationals' Tax Planning And Their Organizational Structures

Tax planning always utilizes the variation possibility within the definitions of taxpayers in tax legislation and focuses on the key attributes that determining a taxpayer for planning purpose, i.e. focusing on the factors having tax attributes and used by multinationals for establishing their organizational structures, including organizational form, registration place, nature of business, etc. If a multinational has an appropriate structure, international tax planning techniques can be used. If a multinational has an inappropriate structure, modification of its structure will be required before utilizing any tax planning techniques. Thus the interactions between multinationals'tax planning and their organizational structures arise from their tax planning activities. However, more importantly, such interactions exist in the strategic management process. Due to the vital importance of strategic management to the survival and development of multinationals and the importance of "the fit between strategy and structure" in management, this thesis explored the relationships and implications of the interactions between multinationals' tax planning and their organizational structures from the perspective of management by utilizing the strategic management process, and pointed out that since the boards of directors have not always given tax the attention it deserves, tax planning has not been able to be fully integrated into multinationals'strategic planning processes and the changes of the organizational structures as a result of tax planning activities are not always matched with strategies of the multinationals, thus affecting strategy implementation and the achievement of the long-term objectives of the multinationals.Tax planning assists in strategic planning. Organizational structure assists in strategy implementation. Both tax planning and organizational structure are of service to strategic management. Thus it is important for multinationals' boards of directors to pay attention to "tax governance" by having tax planning being fully integrated into the strategic management process and to pay attention to establishment and modification of organizational structures, as all these can help establishing commercial value, bringing benefits to corporate shareholders and other related stakeholders, becoming responsible and reputable businesses in the eyes of customers, suppliers, governments, the public, etc., and creating a win-win situation which enables the multinationals to survive and develop by continuously encountering future opportunities and challenges successfully.