Running head: OIL CURSE, KFC IN CHINA, DOUBLE IRISH AND A DUTCH SANDWICH 1

The Oil Curse, KFC in China, Double Irish and a Dutch Sandwich

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The Oil Curse

A specific phenomenon in worlds oil business can interfere with the whole economic system of a country. It has a nickname the oil curse. When a country or region discovers a mineral, which can enlarge the total income of a country, occasionally, it may have an adverse effect: the country suffers from economic problems connected with this mineral. The reasons behind this phenomenon are the decline of competitiveness in other sectors of the economy and the growth of corruption.

The World Banks participation appeared to be a critical aspect because of several following reasons: World Banks share of the 4.1 billion wasnt big enough and therefore the participation was critical from the very beginning. On the other hand, the World Bank had other outstanding loans to Chad.

The deal between Chad and the Word Bank was based on the credible legal grounds. To get the World Banks approval for the existing loan, Chad agreed to follow the Petroleum Revenue Management Law.

The consortium was in the middle of the conflict. Therefore, it decided to withhold the revenues until the dispute between the World Bank and Chads government was resolved. Consequently, a compromise should have been carried out in that case. The World Bank authorities understood the great role of consortium and might have agreed to the delivery of funds for Chads government.

After signing the pipeline agreement, world oil prices have increased. In any case, the oil companies should have offered to increase the royalties paid to Chads government after the dispute, in order to control the financial state.

The actors involved in Chads oil deal should have known the outcome of the situation beforehand as the oil curse phenomenon had taken place before in such countries as Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, etc.

KFC in China

KFC dates its origin back to 1987 when a west-oriented type of fast food restaurants came into existence. KFC is an American brand and it was started in Louisville, Kentucky. It was discovered that it wasnt enough to rely on foreign brands and instead adaptation to local tastes and lifestyles was needed. Nowadays, KFC is planning the expansion of a traditional Chinese fast food chain called East Dawning. Ten East Dawning branches have been opened in Shanghai since 2005. In 2008, Yum intended to add 425 new branches.

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In 2002, KFC opened China's first drive-through restaurant. The Chinese consumers should have expected that as a drive-through service, it was very common among American-oriented fast food restaurants.

Double Irish and a Dutch Sandwich

Tax rates and tax treatment of corporate income vary so dramatically among countries because firms, tax lawyers, and accountants are constantly engaged in taxation processes. At the same time, the authorities of all countries strive to make these actions clear in order to ensure that all taxes owed to the government are appropriately collected. They are playing the so-called cat-and-mouse clashes.

The Double Irish and Dutch Sandwich is a system which serves to lower the tax rate of Google. It works as follows: Irish law exempts payments are issued to a few states so those European profits make a brief stopover in the Netherlands on their way from Ireland to Bermuda.

It is impossible for Google to send money to Bermuda as the Irish law prevents such operation. The only way is the incurring a particular tax hit. If the company uses this method, the payment goes through a detour. The Netherlands is the direct actor in the taxation deal. Ireland in this case doesnt tax payments to organizations of European Union states.

I cannot consider Googles taxation trick to honor the motto Dont be evil. Google is one of the biggest corporations and isnt ashamed of evading taxes. The trick was rather simple: Microsoft used Irish subsidiaries that enabled the company to reduce its taxes in 2011. The bill was reduced by 2.43 billion dollars. This information was introduced to the audience after the memorandum in Washington, DC.

The saving of 2.43 billion dollars was made through the avoidance of tax royalty payments for two parties: Microsoft Ireland Operations Ltd and Microsoft Ireland Research. The second one is the subsidiary of another organization with a different name (Round Island One). Google and Microsoft are not acting ethically, but they abide to the law. If the whole system follows the law, then their smart investigations into tax system deserve the existence.

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