Also, I would like to note, that the mechanisms for
avoidance of economic double taxation, can create an opportunity, for
further reduction of corporate income taxes.
Such opportunity might present itself where country B and country D qualify
funds provided by Intermediate Sub one to local Sub differently.
To illustrate, if we return again to our tax planning base case,
say Intermediate Sub one would provide funds to local Sub.
And, if country B qualifies such funds as capital investments,
any return on that investment would likely be non-taxable,
based on the local mechanism for avoidance of economical double taxation.
If country D qualifies the investment as a loan under it's domestic tax rules,
any return paid on that investment will be considered interest.
And, as we saw in video two in this module,
such interest payment would reduce taxable base of Local Sub.