Panamera Inc to open foreign based subsidiary

Panamera Inc. Plan to Open Foreign-Based Subsidiary Student’s Name Institutional Affiliation Course Instructor Date Panamera Inc. Plan to Open Foreign Based Subsidiary Panamera Inc. is a Canadian company that provides software services to its clients. In line with the firm’s plan to optimize its credit card processing fees on international transactions, Panamera Inc. wants to establish a foreign-based subsidiary in Hong Kong. The company hopes to reduce its card processing charges on international clients by 1% in the new market during its hyper-growth phase. The following essay will assess the economic feasibility of launching a new subsidiary in Hong Kong by evaluating and comparing the region’s economic factors with those of Canada, Isle of Man and Belize. Comparative Analysis of Tax Rates Hong Kong offers a very conducive business environment which favors many investors. The country’s tax system is fair, with the corporate tax rate set at 16.5% (Théaud, 2024). This tax is imposed on profits that corporations have made from doing business within Hong Kong. Hong Kong's tax rate is significantly lower and more favorable than that of other jurisdictions because it does not tax income gains sourced from abroad. Hong Kong's tax system, which is centered on profits gained locally, attracts many international investors and business people. Canada In comparison to Hong Kong, Canada’s federal corporate tax is set at 15% (Taxtips.ca., 2024). In addition to this tax, the country also imposes provincial tax depending on the location of a business. Provincial taxes can range between 1% to upwards of about 16% in a province like Prince Edward Island (Canada.ca., 2024). The “double” imposition of federal and provincial taxes may see investors pay between 25 to 31% corporate tax (Canada.ca., 2024). The high level of taxes in Canada makes the cost of running a business high and untenable for new investors...