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Companies might face several obstacles when managing their accounting in low-tax jurisdictions. Firstly, there could be regulatory challenges as different countries have different accounting and tax laws. Secondly, there might be reputational risks associated with tax avoidance strategies. Thirdly, the complexity of managing finances across different jurisdictions can lead to increased costs and administrative burdens. Lastly, there could be potential risks of penalties and back taxes if the company's tax strategies are deemed aggressive or illegal by tax authorities.
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The idea that in a global capital market, companies flock to countries with the lowest tax rate isn't very compelling either. Companies manage their accounting in such a way that reported profits to show up in low-tax jurisdictions. This shows up in the paper as large overseas investments. The vast sums corporations have supposedly invested in Ireland have led to remarkably few jobs and little income for the Irish. Similarly, the money that moved back to the United States after the tax cut was also an accounting fiction. It hasn't resulted in increases in jobs, wages or investments.
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“Zombie ideas” simply refuse to die despite mountains of evidence to disprove them. How do you fight them? Paul Krugman, Nobel Prize winner in Economi...
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