1. In deciding whether to establish a foreign operation, which factor(s) might a multinati corporation (MNC) consider?

a. After-tax returns from competing investment locations.

b. The tax treatments of branches versus subsidiaries.

c. Withholding rates on dividend and interest payments.

d. All of the above.

2. Why might a company involved in international business find it beneficial to estal an operation in a tax haven?

a. The OECD recommends the use of tax havens for corporate income tax avoida

b. Tax havens never tax corporate income.

c. Tax havens are jurisdictions that tend to have abnormally low corporate income tax rates.

d. Tax havens' banking systems are less secretive.

3. Which of the following items might provide an MNC with a tax-planning opportunity

as it decides where to locate a foreign operation?

a. Differences in corporate tax rates across countries.

b. Differences in local tax rates across countries.

c. Whether a country offers a tax holiday.

d. All of the above.

4. Why might companies have an incentive to finance their foreign operations with as much debt as possible?

a. Interest payments are generally tax deductible.

b. Withholding rates are lower for dividends.

c. Withholding rates are lower for interest.

d. Both (a) and (c).